Kenneth Rapoza – Forbes, 06/09/2016
Brazil’s Central Bank kept interest rates at 14.25% on Wednesday after market hours as expected, citing inflation concerns. No one expected a surprise cut anyway, as the Bank is now undergoing a leadership shift. Alexandre Tombini is out. Itau economist Ilan Goldfajn is now in. Wednesday marked the last time Tombini will take part in a monetary policy committee meeting as Bank governor.
For now, investors shouldn’t expect a rate decline until October at the earliest, says Nomura Securites analyst Joao Ribeiro. The iShares MSCI MSCI +% Brazil (EWZ) sold off by 1.4% after market on the news.
A copy and paste statement from the Bank reads: “The committee recognizes the advances in the policy to combat inflation, especially the containment of the second order effects of the adjustments in relative prices. However, the committee considers that the high level of 12-month inflation and inflation expectations that are distant from the objectives of the target regime, do not offer space for easing of monetary policy.”
Paula Sambo – Bloomberg Business, 01/21/2016
Brazil’s real sank to a four-month low and traders priced in faster inflation after the central bank surprised economists by keeping interest rates unchanged even with consumer-price increases running at more than twice the target.
Policy makers said in a statement accompanying Wednesday’s decision that the global economic outlook was increasingly uncertain, signaling they’re prioritizing economic growth over taming consumer-price increases. Central bank President Alexandre Tombini, in an unusual statement released Tuesday, said he would take into account the International Monetary Fund’s forecast for a deeper recession in Brazil this year.
While forecasts for Brazil’s deepest and longest recession in more than a century could justify a decision to keep interest rates unchanged, the central bank didn’t communicate its strategy clearly in the weeks leading up to the meeting, said Nicholas Spiro, a London-based managing director at Spiro Sovereign Strategy. The decision to hold interest rates at 14.25 percent, when most economists expected an increase, stokes concern that it’s susceptible to political influence.
Filipe Pacheco – Bloomberg Business, 7/01/2015
Brazil’s Central Bank President Alexandre Tombini reiterated that policy makers are committed to the goal of bringing inflation to target at the end of next year.
Policy makers are seeing market expectations converge toward the center of the inflation target of 4.5 percent per year in the “mid- to long-term interval,” Tombini said at an event in Sao Paulo on Wednesday evening. “Our goal is to bring inflation to the center of the target at the end of 2016.”
He added that the central bank’s goal has been to prevent inflationary effects of “relative price realignment in the short term from being transmitted to a longer horizon.”
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.