Brianna Lee – International Business Times, 1/14/2015
Brazilian President Dilma Rousseff has been focusing her energy on restoring investor confidence in Brazil just months after narrowly winning her second term against a market-oriented opponent. But she is now drawing attention for scrapping plans to attend the World Economic Forum in Davos, Switzerland, next week, opting instead to go to the swearing-in ceremony of Bolivian President Evo Morales.
Rousseff had not confirmed her attendance at the forum, which takes place Jan. 21-24. According to local reports, she made a late decision Tuesday not to attend the international meeting so that she could travel to La Paz, Bolivia, for Morales’ inauguration as he starts his third term. Newly appointed Finance Minister Joaquim Levy and Alexandre Tombini, the president of Brazil’s central bank, will go to the forum to represent the country.
The president sparked criticism for her decision, with Brazilian weekly magazine Veja commenting that it would have been an “opportune moment” for her to restore investor confidence by attending the Davos meeting, given Brazil’s “worsening economic indicators and external pessimism.” But Brazil’s Estadão newspaper, citing an unnamed presidential aide, said the president was concerned about stoking domestic political turmoil with an overseas trip in the wake of looming legislative elections.
Matthew Malinwoski – Bloomberg, 12/19/2014
Brazil’s current account gap in November was wider than economists forecast, as the trade deficit also widened.
The deficit in the current account, the broadest measure of trade in goods and services, in November widened to $9.3 billion from $8.1 billion a month earlier, the central bank said in a report distributed today in Brasilia. That was the biggest deficit since January and wider than predicted by 27 economists surveyed by Bloomberg, whose median estimate was for an $8.5 billion gap. Foreign direct investment in the same period fell to $4.6 billion from $5 billion in October.
Brazil’s current account has deteriorated as lower commodity prices and slower growth fromChina to Argentina undermine the trade balance. While foreign direct investment is expected to remain above $60 billion for the fifth straight year in 2015, inflows are no longer sufficient to cover the account gap. Still, central bank President Alexandre Tombini said this week that faster global growth and a weaker real will create a more favorable outlook for exports next year.
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.
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.
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.
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.
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.