Today: how the Central Bank will try to tame inflation and currency devaluation. Why reforming courts could bring economic growth to Brazil. And why Brazilian travelers are unwanted.
Central Bank jacks up interest rates
After nearly six years at its lowest levels ever, Brazil’s benchmark interest rate has risen, from 2 to 2.75 percent. It was a much higher increase than analysts predicted, and may be the beginning of a new series of increments. In May, the Central Bank expects to bump rates up by 0.75 points once again, “barring a significant change in inflation projections or in the balance of risks,” said the Monetary Policy Committee, in a statement.
Why it matters. The Central Bank’s decision aims to curb the negative impacts of steep currency devaluation — BRL has lost 7.5 percent of value this year alone — and rising inflation, which is already poking at the government’s target ceiling.
- The government revised its inflation projections way up, from 3.23 to 4.4 percent.
How would the medicine work? The rationale behind a hike in interest rates by the Central Bank is that it would curb consumption rates — thus easing inflation — and attract more foreign capital, increasing the...