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Comment by raincom | Hacker News Reader

That's bad then: nominal interest rate should be greater than the perceived inflation rate. What does this interest rate hike achieve then? I think, it creates more inflation, instead of curbing inflation.

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Interest rates are a mean to control the expected inflation, not the realized one. The expected inflation for 2024 is 36%, which means the current interest rates are sufficient to settle it.

That would be true if the government instutition in charge of determining actual inflation wasn't fudging the numbers. I was actually suprised to see people discussing this interest increase like it means something.

Both announced and the expected inflation (especially after the changes in the central bank admin, since May) numbers have been globally recognized both by local independent groups (most known one is ENAG) and international financial institutions. Where did you end up with this idea of inflation number not meaning anything?

They can’t explode the interest rate from 8% to 60% over night. This is the latest in half a dozen incremental increases, each one very high by western standards (but each one tiny relative to inflation).

Now they’re finally approximately in the range of “this might actually have some useful effect”.

They've had to become this drastic because they refused to do it and decreased it instead when exchange rates & inflation were already getting out of hand and relatively small adjustments could have had an effect. It was a weird religious belief and personal "feelings" of the president, who calls himself an economist (among other things).

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