Brazil raised rates 575 basis points since March in the world’s largest tightening cycle, and traders are betting on another hike of at least 1.5 percentage points for Wednesday. As the economy goes into recession, policy makers led by Roberto Campos Neto face the challenge of controlling high inflation without further reducing activity.
Consumer prices rose 10.73% in mid-November from a year earlier, driven by higher transportation costs. The objective of the Central Bank of Brazil is an annual inflation of 3.5% for next year and 3.25% for 2023, with a tolerance range of plus or minus 1.5 percentage points.
Brazil’s economic rebound after the worst phase of the Covid-19 pandemic stalled as inflation soared into double digits, forcing the central bank to increase borrowing costs aggressively.
The Senate last week approved a bill that loosen key public spending regulations to accommodate greater cash transfers to the poor, as part of a social program that the president Jair Bolsonaro It will launch before the 2022 elections after a consequent fall in public image. The legislation has yet to undergo further voting before it is enacted.
Source From: Ambito
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