After months of speculation and the world’s longest tightening cycle, it looks like Brazil may finally be done increasing interest rates.
© The Financial Times Ltd 2014 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
Brazil’s economic growth continues to disappoint.
After data in December showed Brazil’s economy shrank in the third quarter of last year for the first time since 2009, the central bank’s IBC-Br index, a monthly proxy for gross domestic product, on Friday showed economic activity fell 0.3 per cent in November from a month earlier. Continue reading »
Brazil’s central bank has increased its benchmark interest rate by 50 basis points to 10 per cent, as expected.
Here’s the accompanying statement:
Giving continuation to the adjustment of the benchmark interest rate, which began with the meeting in April 2013, the Copom (central bank’s monetary policy committee) decided unanimously to raise the Selic rate to 10 per cent a year, without bias.
Well, it was fun while it lasted, but it seems that Brazil’s brief affair with low interest rates is over. The country’s central bank is widely expected to raise the benchmark Selic rate by 50 basis points to 10 per cent late on Wednesday, pushing it back into double digits for the first time since March of last year.
The move in itself is welcome — 12-month inflation in the month to mid-November came in at 5.78 per cent. That may be better than previous months, but it is still a long way off the country’s 4.5 per cent target.
However, Brazil’s monetary policy U-turn does raise several questions. Continue reading »
All eyes are on the central bank in Brazil on Wednesday as the market counts down to the latest interest rate decision. But this time it’s not so important what policymakers say but how they say it. Continue reading »
Yes, the bank has a tolerance band of 2 percentage points in either direction in case of “external supply shocks” but the target is 4.5 per cent. It’s been 4.5 per cent for the past eight years. Continue reading »
No surprises there then. Brazil’s central bank voted on Wednesday to raise the country’s benchmark interest rate by 50 basis points to 8.5 per cent, as expected by analysts. Continue reading »
Second-guessing Brazil’s central bank has been a little tricky recently. Market volatility and behind-the-scenes political pressure have made interest rate decisions somewhat of a mystery. But economists and traders are relatively confident of a 50 basis point interest rate hike later on Wednesday, it seems. Continue reading »
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 »
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 »
Brazil’s central bank is in tightening mode again, raising its policy interest rate last week after a long cycle of loosening that began in August 2011. It is worried that inflation is on the rise and less worried, apparently, about slow growth.
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 »
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 »
|About this blog||Morning espresso||Blog guide|