Today, we cover markets’ expectations around the latest meeting of Brazil’s Central Bank Monetary Policy Committee. How airlines are managing to survive without a government bailout. And the broken promises of 2020 IPOs.
Market awaits a sign from the Central Bank
Later today, the Brazilian Central Bank will announce its decision on the country’s Selic benchmark interest rate. The consensus among analysts is that the pandemic and sluggish economy will hold the rate at its current level of 2 percent a year, which is already an all-time low. Beyond the decision about the rate itself, markets want to see what the Monetary Policy Committee will say about the country’s fiscal risk and the outlook for potential future interest rate changes.
What is happening. Unease about Brazil’s fiscal situation is growing, as the country’s debt levels shoot up due to the massive spending required to offset the effects of the pandemic. Relief programs have topped USD 107 billion, or 8.4 percent of GDP. Bloomberg reckons it as “more like the massive stimulus packages engineered by the world’s wealthiest nations than those cobbled together by Brazil’s junk-rated peers in emerging markets.”
- Investors demand higher premiums to keep public bonds, which has...