Brazil wants to raise another major interest rate to offset inflation

Economic reforms in Brazil

Brazil’s largest bank is set to raise interest rates for the fifth consecutive year this year, in the fight against inflation that has affected nearly two numbers.

World convention, the worst drought nearly a century ago and declining incomes have contributed to the rise in prices on everything from food to oil, striking millions in Latin America’s largest economy.

While global financial policy makers are considering how to drive inflation by removing the Covid-19 restrictions, Banco Central do Brasil, or BCB, is one of the strongest in the coming markets.

A large amount of it is placed in the camp of cheap prices together with Russia. Central banks in Mexico, Chile, Peru and South Korea have also recently raised interest rates.

Ahead of the BCB decision Wednesday evening, many economists predict that it will raise the same level of Selic by 100 points to 6.25%, following the same rate last month.

An economist, Gustavo Arruda at BNP Paribas, said the BCB should go on to say: “We believe the BCB should raise interest rates by 150 bps in this session. However, he said such an increase would not happen.

This growth is expected to come after annual inflation reached 9.68% last month, as measured by inflation, above the BCB target of 3.75% by 2021. The monthly increase of 0.87% was the largest in August since 2000.

Of the G20 countries, only Argentina and Turkey are expected to have higher prices than Brazil this year, according to OECD figures.

Political tensions between President Jair Bolsonaro and judges in the Supreme Court have intensified in Brazil in recent months, as well as financial concerns ahead of next year’s elections. This means rising domestic prices on the prices of dollars in global markets.

Having already pushed Selic out of 2% for the rest of the year, BCB governor Roberto Campos Neto has promised to do “whatever it takes” to bring inflation.

In a world plagued by escalating pricing experiences, it includes the transition between managing money and meeting more demands, even as the economy worsens.

Unemployment remains high and analysts have independently reduced GDP growth in Brazil to 1.6% by 2022, according to a bank-based survey, following a 5% increase this year.

As the global economy recovers due to the closure of coronaviruses, there is controversy over whether high prices are about to become a temporary phenomenon, due to barriers to sales and the release of their demands.

Natural resources have also helped Brazil. Lack of rainfall in the southern and central regions has reduced the country’s water-dependent reservoirs that generate more electricity, forcing the need to change tropical climate. Economists are writing at 4.1% next year.

“There will be a slight decline in inflation by 2022,” said João Leal, an economist at Rio Bravo Investmentos. “No country has ever been as unpredictable as Brazil.”

Additional reports of Carolina Pulice

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