Despite risk of recession, interest rates should hold
At 6 pm today, the Central Bank’s Monetary Council will announce Brazil’s benchmark interest rates for the next 45 days. Despite the risk of recession (that is, two straight quarters with negative growth), the bank is not expected to lower rates—a common strategy to foster investments. According to Itaú Unibanco, the Central Bank won’t change the Selic rate until there is “more clarity around the economic reforms—especially the pension reform.”
Nevertheless, a downward bias is building rapidly. The Brazilian economy remains sluggish, with investments at a worrisomely low...
