Never has a larger share of Brazilians owed money. New data from the Central Bank shows that the country’s household indebtedness levels reached 53.1 percent in July, a new record (in the data series starting in 2005). Almost one-third of families’ monthly income is eaten up by debt payments.
This is the result of a combination of worsening economic conditions, with prices climbing at a fast pace while wages stagnate, and persistently high interests.
Since March 2021, Brazil has undergone one of the world’s steepest monetary tightening processes, with benchmark interest rates climbing from 2 percent a year to the current 13.75 percent. Last week, the Central Bank told markets it would remain “vigilant” around an inflationary environment that “remains challenging” — confirming what we had anticipated back in June: interest rates...
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