Brazil Real Intervention Out of Sync With Slowdown, IMF Says

July 30, 2014

Sebastian Boyd – Bloomberg, 7/29/2014

The International Monetary Fund said Brazilian central bank President Alexandre Tombini shouldn’t shore up the real as Latin America’s largest economy stalls and inflation accelerates.

Adjusting for inflation, Brazil’s currency was 5 percent to 15 percent stronger than “implied by fundamentals and desirable policies” in 2013, IMF economists wrote in a research report published today. The real has appreciated 5.9 percent this year against the dollar while inflation accelerated to a 13-month high and economic growth slowed.

The central bank said last month it was extending through the end of 2014 a currency intervention program aimed at helping to boost the real and curb prices for imports. After nine consecutive increases in the target lending rate, policy makers held it at 11 percent on July 16 for a second straight meeting. The central bank didn’t return phone and e-mail messages seeking comment today.

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Brazil’s Tombini says Global Economy recovering, but sees volatility

May 14, 2014

Matthew Cowley – The Wall Street Journal, 5/13/2014

Global markets will be more volatile as the world economy starts to recover from the financial and economic crisis, but this shouldn’t be confused with vulnerability, the head of the Central Bank of Brazil said Tuesday.

The global economy is “finally recovering from the lingering effects of the global financial crisis” and international monetary conditions are beginning “a process of normalization,” Alexandre Tombini said in a speech to the Brazilian Chamber of Commerce in Great Britain.

This process is already under way in the U.S., he said, referring to the Federal Reserve’s move to reduce its bond-buying program.

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Central Banker Tombini says Brazil well-prepared for QE pullback

April 10, 2014

Pedro Nicolaci da Costa – Wall Street Journal, 4/10/2014

Brazil has built up enough domestic buffers against rapid shifts in capital flows to allow it to withstand a pullback from unconventional interest rate policy in the world’s largest economies, Central Bank Governor Alexandre Tombini said.

Mr. Tombini agreed in part with Indian central bank chief Raguram Rajan, who argued during a Brookings Institution speech that aggressive monetary easing in advanced economies had made life harder for developing countries.

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Brazil raises key rate for ninth straight meeting to 11%

April 3, 2014

Matthew Malinowski & Raymond Colitt – Bloomberg, 4/2/2014

Brazil signaled that the world’s longest rate tightening cycle might be coming to an end and raised borrowing costs for a ninth straight meeting.

The bank’s board, led by its President Alexandre Tombini, today voted unanimously to raise the Selic rate to 11 percent from 10.75 percent, as forecast by all 57 economists surveyed by Bloomberg. Policy makers have raised borrowing costs by 375 basis points, or 3.75 percentage points, in less than a year.

The bank at its last meeting in February signaled that tightening might soon end by halving the pace of rate increases. Brazil in the last year has increased borrowing costs more times than any other central bank worldwide, with the total increase in borrowing costs trailing only Turkey among major economies. Policy makers’ efforts have also been helped by the second-biggest currency gain among emerging markets since January.

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Brazil economists lower selic forecast for second straight week

March 10, 2014

Matthew Malinowski – Bloomberg, 3/10/2014

Brazil economists cut their 2014 key interest rate forecast for the second straight week, as 350 basis points in borrowing cost increases since last year threaten to undermine growth.

Brazil’s central bank will lift the benchmark Selic to 11 percent this year, compared with analysts’ estimates of 11.13 percent last week and 11.25 percent two weeks ago, according to the March 7 central bank survey of about 100 economists published today.

President Dilma Rousseff’s administration is combating prospects of faster inflation and slower growth. While the economy expanded more than analysts’ estimates in the fourth quarter, both consumer and industrial confidence remain low. The central bank on Feb. 26 halved the pace of key rate increases as factors including a weaker real pressure consumer prices even as demand remains uneven.

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Brazil signals further tightening on persistent inflation

March 6, 2014

Matthew Malinwoski & Raymond Colitt – Bloomberg, 3/6/2014

Brazil’s central bank signaled today it will continue tightening monetary policy as above-target inflation remains persistent. Swap rates rose.

Policy makers led by bank President Alexandre Tombini voted unanimously on Feb. 26 to slow the pace of rate increases, raising the benchmark Selic rate to 10.75 percent from 10.5 percent after six straight half-point increases. The central bank’s monetary policy will help offset inflationary pressure from a currency depreciation, officials said in the minutes of their Feb. 25-26 meeting published online today.

The central bank considers “appropriate the continuation of the adjustment of monetary conditions under way,” according to the minutes. “Currency depreciation constitutes a source of inflationary pressure in the shorter term.”

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Brazil fourth quarter growth exceeds all analyst forecasts

February 27, 2014

David Biller – Bloomberg, 2/27/2014

Brazil’s economy grew in the fourth quarter more than economists forecast as an increase in investment offset a drop in industrial production.

Brazil’s gross domestic product rose 0.7 percent in the fourth quarter from the prior three months after contracting 0.5 percent in the third quarter, the national statistics agency said today in Rio de Janeiro. That is above every forecast from 49 analysts surveyed by Bloomberg, whose median estimate was for 0.3 percent growth. Brazil’s GDP expanded 2.3 percent in 2013.

Today’s data will help boost lagging confidence in the world’s second-biggest emerging market, according to Jankiel Santos, chief economist at Banco Espirito Santo de Investimento. PresidentDilma Rousseff has overseen the slowest three-year growth period in a decade, with above-target inflation eroding consumer and business confidence. Policy makers led by central bank President Alexandre Tombini halved the pace of key rate increases yesterday as they work to tame inflation without further jeopardizing growth.

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