Latin America News
LAST UPDATE: June 10, 2025
Colombian Inflation Slows More Than Forecast to Lowest Since 2021
Colombian inflation slowed more than expected in May to its lowest level since 2021, potentially bolstering the arguments of Finance Minister German Avila who is calling for much deeper interest rate cuts. The annual inflation rate fell to 5.05%, from 5.16% in April.
Insight
Colombia’s inflation decline represents a significant economic milestone that could reshape monetary policy decisions in Latin America’s fourth-largest economy. The faster-than-expected deceleration to 5.05% provides ammunition for Finance Minister Avila’s advocacy for aggressive rate cuts, potentially creating tension with central bank independence. This development occurs against the backdrop of President Gustavo Petro’s progressive agenda and ongoing economic challenges. The inflation reading, while still above the central bank’s 3% target, marks substantial progress from the higher rates that plagued the economy in recent years. The trend could signal improving economic conditions and provide fiscal space for Petro’s social programs, though sustainable reduction below the 3% target remains crucial for long-term economic stability and investor confidence.
Argentina launches $2 billion repurchase agreement to boost reserves
Argentina’s central bank rolled out a broad package of economic measures on Monday meant to boost reserves, including a repurchase agreement, or REPO, of up to $2 billion. The deal comes ahead of an expected review with the International Monetary Fund of the country’s recently signed $20 billion loan agreement.
Insight
Argentina’s $2 billion repo deal represents a critical financial maneuver in President Javier Milei’s broader economic restructuring strategy, demonstrating the country’s urgent need to rebuild foreign reserves ahead of IMF program reviews. The timing is crucial as Argentina needs to strengthen its net foreign exchange reserves by $4.4 billion by the first review, having entered with reserves in the red. This financial engineering, combined with the central bank’s shift to market-determined interest rates, signals Milei’s commitment to orthodox monetary policy despite political pressures. The deal follows Argentina’s recent $1 billion bond issuance and represents part of Milei’s “Phase 3” economic plan, which includes peso flotation and capital control elimination. Success in rebuilding reserves will be essential for maintaining IMF support and preventing another debt crisis in South America’s second-largest economy.
Fearing arrest, Argentina’s Kirchner urges backers to ‘organize’
Former Argentine President Cristina Kirchner called on supporters to organize amid fears of imminent arrest, which she attributed to judicial persecution aimed at barring her from politics.
Insight
Kirchner’s call for supporter mobilization represents a critical inflection point in Argentine politics, potentially escalating tensions between the Peronist opposition and Milei’s government while testing the country’s democratic institutions. Her appeal comes as the Supreme Court weighs her corruption conviction, which carries a six-year prison sentence and lifetime political ban. The former president’s strategy of seeking legislative immunity through a congressional candidacy while simultaneously mobilizing street support demonstrates classic populist tactics of delegitimizing judicial processes through claims of political persecution. This dynamic could create significant political instability in Argentina, particularly if mass demonstrations coincide with adverse court rulings. The situation also reflects broader regional trends of polarization between traditional center-left parties and new right-wing movements, with Kirchner positioning herself as a victim of what she terms “lawfare” – the weaponization of legal processes for political ends.
