Economics
Paul Krugman Says the Liquidity Trap Has Spread to Emerging Markets
- Peru and Chile have slashed interest rates almost to zero
- ‘First-world credibility’ brings with it a new set of problems
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Two months into the deepest slump in decades, some of Latin America’s major economies are close to losing their main recession-fighting tool -- interest rate cuts.
Peru and Chile have already lowered borrowing costs almost to zero, and are being forced to consider new tactics to rescue their crashing economies. Brazil and Colombia may soon be in the same boat.