The inflation target set for 2021 by the Minister of Economy, the ultra-liberal Paulo Guedes, was 3.75%, with a margin of error that could stretch it to 5.25%.
The items with the greatest weight were electrical energy –with a rise of 3.9% -, fuels –2.03% -, transport –2.06% -, housing –1.87% – and food 1 , 38%. These are sectors that have a strong impact on the living conditions of the poorest.
The acceleration of inflation exceeds the projections of the specialists, who, called by the daily Valor Econômico, had projected 0.98% for October and 10.1% in the previous twelve months.
The Focus Bulletin, published on Monday by the Central Bank and which includes the projections of the main private analysts, predicted that annual inflation would be 8.96%.
Given this scenario, the Central Bank will raise its reference interest rate again on Wednesday, up to 1.5 percentage points to 7.75% according to market projections. The last time the Selic was above 7.5% was in 2017.
How Argentina?
The Brazilian newspaper O Globo, which editorially favors a “third-way” liberal candidate – different from Bolsonaro and Luiz Inácio Lula da Silva – warned that Brazilian investment funds fear that the president will suffer the “Mauricio Macri effect.” .
O Globo cited five agents of Brazilian investment funds who fear that the increase in spending and indebtedness will provoke a crisis on several fronts that will prevent Bolsonaro from being re-elected, just as Macri could not keep the position after losing the elections in 2019 with Alberto Fernandez.
“High rates and persistent inflation, unemployment, poverty and enormous uncertainty about the government’s ability to solve problems. The economic scenario of the months prior to the Argentine election in 2019, which crowned the defeat of the liberal Mauricio Macri, became part of the projections for Brazil in 2022 since it was learned that the spending ceiling would be broken by Bolsonaro and Guedes, ”said O Globo.
Expectations
A report by Itaú bank indicates that “without a credible fiscal anchor, the Central Bank’s task of keeping inflation on target becomes more difficult.”
“Greater fiscal uncertainty implies greater country risk, greater depreciation of the real, worse inflation prospects and, ultimately, a higher neutral interest rate,” he adds.
President Jair Bolsonaro affirmed that the privatization of the giant Petrobras is on the government’s “radar” and affirmed that the 73.4% increase in fuels in the year is not “evil” on his part but rather the product of the increase in fuel prices. international oil prices.
In the midst of the new government policy, which has decided to eliminate the fiscal ceiling in order to increase social plans in 2022, the year in which re-election is at stake, Bolsonaro tried to send a message to the financial market, whose agents have lashed out at him for having abandoned policies to restrict public spending.
Energy
“The privatization of Petrobras entered our radar, but privatizing any company is not an easy thing … to put the company on the shelf, and that’s it. It is a huge complication. If one takes the monopoly from the State and puts it in the hands of a person, the problem continues, “said the far-right.
The president reiterated that his political and ideological positions prevent him from intervening in the price of fuel, after his pro-market position suffered some damage in recent days with the resignation of five officials from the neoliberal wing of his government.
The resignations came after Bolsonaro announced that to pay extra money to 17 million families there will be a constitutional amendment to bypass the law of the ceiling of public spending that froze the budget from 2016 to 2036.
Petrobras announced on Monday a 7% increase in gasoline and 9.5% in diesel, while groups of truckers prepare a stoppage for November, rejecting the promise of a social plan of 400 reais (70 dollars a month during 2022 ) made by Bolsonaro to compensate for the increase in fuels.
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