The economist and former foreign ministerand the Republic Ernest Talvi has cultivated a low profile and away from the microphones since his retirement from party politics in July 2020. The On September 15, he published an opinion column, from Madrid, titled Will the Fed Strangle Latin America Again? in Project Syndicate, an international organization that brings together publishers, press and association of newspapers. It is considered one of the largest sources of opinion articles in the world.
“Thirty-five years after the former chairman of the US Federal Reserve Paul Volcker left office (and almost three years after his death), the mere mention of his name still sends chills down the spine of Latin Americans who remember the economic devastation caused by his crusade against runaway inflation in the early 1980s,” says Talvi in the introduction to his column.
The economist says that with current US inflation at 8.3% year-on-year in August, the highest in 40 years, Fed Chairman Jerome Powell recently reaffirmed a firm commitment to raise interest rates “whatever it takes to control inflation, which has led many to question whether Latin America is adequately protected against the collateral damage of another ‘Volcker Moment’.” “The short answer is yes, because there won’t be any,” she says.
“Despite Powell’s harsh rhetoricthe Fed will not pursue aggressive Volcker-style interest rate hikes as many experts believe they are necessary”, considers Talvi.
“The Federal Reserve’s natural concern for the health of the US financial system places a limit on how quickly and by how much it can raise interest rates,” he says in another passage.
“The Fed’s current anti-inflationary crusade will certainly not be free of turmoil, but Latin America, and also the rest of the world, can breathe a sigh of relief,” says the expert.
In addition, as a former chancellor, Talvi signs as a Senior Fellow of the Elcano Royal Institute of Madrid.
