Sergio Massa's pre-election fiscal giveaway will put further upward pressure on inflation in Argentina, which is already running at the highest rate since 1991 when the country was exiting hyperinflation. While Argentina is still some way off from entering another hyperinflationary period, there’s a clear risk of inflation trending higher, especially if fiscal policy isn’t tightened sufficiently. Elsewhere, Mexico’s draft 2024 budget tilts fiscal policy in a looser direction ahead of June’s elections, which threatens to put public debt on an upwards path and may prompt Banxico to tread more slowly with rate cuts.
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