Fearing a spike in inflation, Brazil hikes interest rate 75 basis points for the first time since 2015

Thursday, March 18th 2021 - 08:53 UTC

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Brazil's central bank on Wednesday announced a first interest rate hike since 2015, a surprising 75 basis point increase to 2.75% and anticipated a similar increase in May to fight inflation even as the economy struggles during the pandemic. Read full article

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FortHay
At 1 : 5.5 currently, this is bad news for Brazil and good news for those with dollars or other 'hard' currencies. I hope we are not heading back to the bad old days of hyperinflation from the 80's
Mar 18th, 2021 - 07:42 pm - Link - Report abuse 0
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Chicureo
FortHay

Doubtful we’ll see the hyperinflation of the ‘80s unless the PT regains power. Argentina however is in serious difficulties.

The USD however is not as solid as it was before either. Keeping money in savings accounts is not smart either.
Mar 18th, 2021 - 09:23 pm - Link - Report abuse 0
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Jack Bauer
Chicureo

Tend to agree, inflation will continue to fluctuate (caused by the uncertainty of the future/recovery of the economy, and Bolsonaro's erratic behavior), but to predicts levels anywhere near those prior to the Plano Real, I don't think so - inflation prior to the Plano Real was hitting 80 to 90% /month .

Today, with the relatively low (historically speaking) inflation rate, the population (at least one whole generation) has become used to the idea of relative stability and the possibility of planning their finances further ahead than one week. If this changes, the govt and politicians will have a riot on their hands.

International investments - productive, or otherwise (speculation, linked to a higher SELIC rate) - have dwindled to near-to-zero levels, which has made the USD far more expensive....which in turn, negatively impacts (directly or indirectly) everything linked to imports.

But getting back to the prime rate (SELIC), afaic, a few more hikes will be welcome.....currently, investments are paying lousy returns, sometimes negative, obliging investors to venture into higher risk to try to beat inflation.....obviously, this impacts the lower classes far more than those better-off, but when push comes to shove, you've got to be pragmatic.
Mar 27th, 2021 - 05:43 pm - Link - Report abuse 0
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