February 20, 2014
Keith Johnson – Foreign Policy, 2/19/2014
Brazil, the old joke goes, is the country of the future — and always will be. Unfortunately, when it comes to fulfilling the promise of the country’s rich energy resources, the joke rings only too true.
Brazil’s transformation into an energy powerhouse, seemingly so close just a few years ago, has been hobbled by politics. The country’s ability to take advantage of massive offshore oil resources is increasingly questioned, its once-vaunted biofuels industry is reeling, and there are even concerns this year about keeping the lights on and power companies solvent.
There are plenty of things to blame for the hiccups, starting with a severe drought that has hamstrung Brazil’s ability to generate electricity from hydroelectric power, which in turn as led to a spike in fuel imports to run other power plants.
February 19, 2014
Paulo Trevisani – Wall Street Journal, 2/18/2014
Brazil’s struggle to bring down inflation is unlikely to end soon, though it is showing early results, the country’s central bank governor indicated Tuesday.
At the same time, Alexandre Tombini steered clear of joining a large chorus of emerging market central bankers blaming the U.S. Federal Reserve for recent financial market turmoil outside the U.S.
In a conference call with foreign press, Mr. Tombini noted the central bank’s seven interest rate increases over the last 10 months have helped push inflation down by about one percentage point to 5.6%.
February 18, 2014
Matthew Malinowski – Bloomberg, 2/18/2014
Brazil’s interest rate increases that pushed borrowing costs to the highest in two years have succeeded in slowing inflation, central bank President Alexandre Tombini said today. Swap rates fell.
Tombini said the full impact of the 3.25 percentage point increase to the benchmark Selic rate hasn’t fully materialized yet. The central bank will continue to keep a close eye on inflation and make sure it slows in 2014 and beyond, he said.
“Monetary policy operates with a lag. There is still impact of what we have done so far on inflation going forward,” Tombini said today about boosting the benchmark Selic rate. “We are doing our homework, fighting inflation. To a large extent, we have been successful.”
Traders reinforced bets the central bank will slow the pace of interest rate increases next week after Tombini’s comments. Swap rates on the contract due January 2015, the most traded in Sao Paulo today, reversed an earlier increase and fell 0.07 percentage point to 11.15 percent at 1:19 p.m. local time.
February 11, 2014
Blake Schmidt – Bloomberg Businessweek, 2/11/2014
Brazil’s swap rates climbed on concern policy makers will have to keep raising borrowing costs to curb inflation as the nation’s drought and heat wave contribute to higher food and energy prices.
Swap rates on contracts maturing in January 2015 rose four basis points, or 0.04 percentage point, to 11.35 percent at 12:46 p.m. in Sao Paulo, erasing earlier declines. The real depreciated 0.1 percent to 2.4120 per dollar as Federal Reserve Chairman Janet Yellen pledged to maintain the policy of scaling back in “measured steps” a U.S. stimulus program that had supported emerging markets.
Brazil’s worst drought and heat wave in decades is threatening to reduce crop yields and drive up prices. Receding levels in reservoirs may force the nation’s utilities to rely on expensive alternatives to hydroelectric power. To curb inflation, policy makers lifted the target lending rate last month by a half-percentage point for a sixth straight meeting, increasing it to 10.50 percent.
February 4, 2014
David Biller – Bloomberg, 1/4/2014
Brazil’s President Dilma Rousseff told Congress at the start of its legislative year today her government’s commitment to slowing consumer price increases is “non-negotiable.”
“I reaffirm our commitment to measures aimed at converging inflation (BZPIIPCY) to the center of the target range,” Rousseff, who is eligible to run for re-election in October, wrote in her message to lawmakers.
Inflation in 2013 exceeded the mid-point of the government and central bank target range of 2.5 percent to 6.5 percent for the fourth straight year. Monetary policy makers have responded by boosting the benchmark interest rate for seven straight meetings while Rousseff’s economic team has pledged to control spending so it doesn’t fan prices.
February 4, 2014
Gerald Jeffris – The Wall Street Journal, 2/3/2014
Brazil’s economy has weathered recent global turbulence well and remains an attractive destination for foreign investment, Brazilian President Dilma Rousseff said Monday in a message to the country’s Congress at the opening of the 2014 legislative session.
In the message, which was read to lawmakers by Senate steering committee member João Vicente Claudino, the president said Brazil would continue to maintain a stable economy and serve as a safe destination for foreign capital.
“Brazil is and will continue to be one of the most attractive markets for foreign investors,” she said.
January 27, 2014
John Paul Rathbone & Jonathan Wheatley – The Financial Times, 1/27/2014
The “vacuum cleaner” of rising interest rates in the developed world will continue to suck money out of emerging markets and force authorities to tighten policy to beat inflation – but Brazil is ahead of this curve, the head of the country’s central bank said.
Emerging markets slumped last week after investors took an abrupt devaluation of the Argentine peso as a reminder of the vulnerabilities some countries face as developed world central banks tighten monetary policy, bringing the recent period of superabundant global liquidity to a close.
Alexandre Tombini said this normalisation of world interest rates was a net positive for emerging markets as it reflected economic recovery taking hold in the developed world. “We are great defenders of this process” even if it brought bouts of volatility, such as last week’s currency gyrations, he told the Financial Times.
January 24, 2014
Paul Kiernan – The Wall Street Journal, 1/23/2014
The organizing committee for the 2016 Olympic Games in Rio de Janeiro raised its budget estimate Thursday due to fast-rising salaries in Brazil and the addition of new sports, despite shifting some expenses to the government’s tab.
The 7 billion Brazilian reais ($2.92 billion) that the committee plans to spend on items such as ceremonies, wages, technology, accommodations, food and transport during the event will come entirely from private sources. But it represents just a fraction of overall expenses, according to Rio’s 2008 bid for the Games, which estimated total spending at $14.4 billion.
The operating committee’s new budget also isn’t directly comparable to its original estimate. In 2008, the Olympics were expected to cost BRL5.63 billion to operate and were expected to receive BRL4.25 billion in private funding plus BRL1.38 billion in government subsidies, not considering inflation.
January 23, 2014
Brazilian Finance Minister Guido Mantega said on Thursday that a recent slowdown in price increases in January shows his government is committed to keep inflation under control.
Speaking at a webstreamed press conference from Davos, Switzerland, Mantega said the government has not yet decided on its budget fiscal goal for 2014. Investors are keeping a close eye on the government finances that have quickly deteriorated over the last two years.