[snap]: Brazil hikes rates by 50bps to 8%
Brazil sure does like to keep the market on its toes. After this morning’s disappointing first quarter GDP, the country’s central bank came out with another shocker on Wednesday night.
The central bank’s monetary policy committee increased the benchmark Selic rate by 50 basis points to 8 per cent. The market was expecting an increase of 25bps. Continue reading »
Brazil’s central bank: gnashing and wailing [updated]
Imagine being in the shoes of Brazil’s central bank president Alexandre Tombini (pictured) on Wednesday. Beyondbrics pictures the scenario as something like this:
Mr Tombini was sitting at his desk reading the newspapers this morning and thinking about tonight’s regular meeting of the monetary policy committee, known as Copom. “I think I will argue for a 50 basis point rise tonight. After all, inflation is hovering near the top of our admittedly already generous range of 4.5 per cent plus or minus 2 percentage points and it’s time to show that we mean business.” Continue reading »
Chart of the week: Brazil’s foundations, undermined?
But behind recent numbers on inflation is another set of numbers on retail sales, which fell in February for the first time in a decade. If that turns into a trend, the very foundations of Brazil’s recent growth story will be undermined. Chart of the week takes a look. Continue reading »
[snap]: Brazil raises benchmark rate
Brazil’s central bank ended an easing cycle that last nearly two years by raising its benchmark lending rate on Wednesday night to tackle rising inflation.
The central bank’s monetary policy committee increased the benchmark Selic rate by 25 basis points. Continue reading »
Brazil’s central bank: strung up by its own indicator
It was slightly better than expected. But not by enough. The latest measure of Brazil’s troubled economy will have left policy makers in a quandry.
The central bank’s monthly activity index contracted by 0.52 per cent in February, dashing any hopes that its 1.4 per cent expansion in January was the start of a sustained recovery. It comes after figures this week showed inflation rising above the government’s tolerated maximum – figures that might have strengthened the resolve of any hawks at the central bank keen to raise interest rates at its policy meeting next week. That now looks a harder trick to pull off. Continue reading »
Brazil rates: when to tighten?
This month, the price of a standard car wash in São Paulo increased to R$32 from R$30 during the previous 12 months.
By coincidence, the increase matched almost exactly the level of inflation estimated for Brazil in February by the central bureau of statistics of 6.31 per cent year-on-year. Continue reading »
[Snap]: Brazil holds rates steady
Brazil’s central bank voted on Wednesday to keep the country’s benchmark interest rate steady at its all-time low of 7.25 per cent, as widely expected.
The accompanying statement from the central bank, however, was a little more mysterious than usual. Continue reading »
Banco do Brasil: borrower’s delight
On the homepage of Banco do Brasil, Brazil’s largest bank, you can take out a loan to buy a car, renovate your house or buy electronics and home appliances. Indeed, never before in Brazil has it been so easy to borrow money from a bank. Record-low interest rates are expected to make things even more attractive for borrowers.
Tipping things even further in favour of borrowers is a push by President Dilma Rousseff to encourage banks, all of them but especially those controlled by the government like Banco do Brasil, to reduce borrowing costs to further fuel lending and get the economy moving. Continue reading »
[snap]: Brazil holds rates steady
No surprises there then. Brazil’s central bank voted on Wednesday to keep the country’s benchmark interest rate steady at its all-time low of 7.25 per cent.
However, the accompanying statement from the central bank was a little more direct than normal. Continue reading »
Brazil’s monetary jeitinho
If there’s one Portuguese word you need to learn before coming to Brazil it’s jeitinho. Literally “little way”, it refers to the nationwide habit of circumventing rules or conventions through highly creative, cunning and sometimes downright illegal tactics.
Can’t get tickets to a show or pass your driving test? Don’t worry; you just need to find a jeitinho. It also works for managing the economy, it seems. Continue reading »
Despite inflation, Chile sticks with its interest rates
Chile’s latest monetary policy report (IPoM) from the Central Bank (BCCh) paints a rosy picture to end the year on – more inflation and less growth in 2013. That’s nice. Continue reading »
Brazil GDP: rapid adjustment
It seems late in the year to be changing your mind but that hasn’t stopped the 100 or so economists surveyed each week by Brazil’s central bank sharply reducing their consensus forecast for 2012 GDP growth: just 1.27 per cent, they say on Monday, down from 1.5 per cent a week ago.
Not only that, they expect a weaker economy in 2013 – 3.7 per cent growth, down from 3.94 per cent last week – and a weaker real by the end of this year (in four weeks’ time): R$2.07 against the US dollar, from R$2.03 a week ago. Continue reading »
[Snap]: Brazil holds rates steady
It’s the end of an era. After more than a year of cutting Brazil’s benchmark interest rate, the central bank voted on Wednesday to keep it steady at its all-time low of 7.25 per cent. Continue reading »
Brazil: enter the dragon
Most economists, it became apparent on Monday, expect Brazil’s central bank to leave its policy interest rate unchanged at 7.25 per cent not only until the end of this year but until the end of next year, too, and even beyond.
But not Marcelo Carvalho at BNP Paribas. He says the rate will be 9 per cent at the end of 2013. The reason? The dragon of inflation. Continue reading »
Brazil rates: moment of truth
It’s the million-dollar question in Brazil right now. Is the recent reduction in interest rates sustainable?
If it is, then the past 14 months or so could go down in history as the turning point not only for the country’s capital markets but for anyone doing business in Brazil. Continue reading »
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