Good morning! The Central Bank is set to lower interest rates in Brazil—but what should we expect moving forward? Plus, the doubts around Jair Bolsonaro’s trip to the UN General Assembly. And the effects of massive pesticide use. (This newsletter is for platinum subscribers only. Become one now!)
Central Bank to take neutral stance on interest rates
Today, the Central Bank’s Monetary Policy Committee will publish the new benchmark interest rates in Brazil for the next 45 days—with analysts unanimously expecting a cut from the current 6 percent a year down to 5.5 percent, which would be a new all-time low. However, with rising uncertainty on an international level, the committee should avoid compromising itself with new cuts to the rate.
Why it matters. With inflation rates way below the government’s target and the economy still sluggish, the Central Bank has little room to do anything else other than lowering the benchmark interest rate. Investors expect it to fall to 5 percent a year by the end of 2019. Therefore, analysts are focusing on what hints the bank will give regarding further moves. But as tensions rise internationally (with escalating unease between Iran and the U.S., problems around Brexit, trade...