Brazil’s inflation slows in mid-July

Silvio Cascione – Reuters, 7/22/2015

Brazil’s inflation slowed in the month to mid-July as the economy headed into recession, potentially paving the way for a smaller interest rate hike by the central bank later this month.

Brazil’s IPCA-15 consumer price index rose 0.59 percent in the month to mid-July as expected by economists in a Reuters poll, down from 0.99 in the previous month, government statistics agency IBGE said on Wednesday.

Trailing 12-month inflation remained high at 9.25 percent,
more than double the official 4.5 percent target.

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Brazil monetary policy to remain vigilant on CPI target: Tombini

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.”

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Brazil Central Bank reaffirms commitment to reduce inflation

Rogerio Jelmayer – The Wall Street Journal, 6/29/2015

Brazil’s central bank president reaffirmed the country’s commitment to reduce inflation, despite negative impacts in economic activity in the short term.

Central bank head Alexandre Tombini said the monetary authority is committed to bring the country’s rampant inflation down to the official target by the end of next year.

“We are conducting a classic economic adjustment, which is necessary to reduce domestic and external vulnerabilities, put public debt back on a declining path and send inflation back to its target by the end of 2016,” Mr. Tombini said Sunday in a speech during the annual general meeting of the Bank for International Settlements, which took place in Basel, Switzerland.

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Real drops amid signs Brazil faces worst recession in 25 years

Paula Sambo – Bloomberg, 6/19/2015

The real fell the most among major currencies as Brazil braced for its worst recession in 25 years after the central bank reported that the economy contracted more than forecast in April.
Efforts by President Dilma Rousseff’s administration to reassure investors by increasing taxes and reducing expenditures are expected to damp the nation’s gross domestic product in the second quarter. Moreover, Brazil is the only nation in the Group of 20 to raise interest rates this year as inflation stays above target, further hampering growth prospects.
“It’s not a good picture,” Joao Paulo De Gracia Correa, a foreign-exchange superintendent at SLW Corretora de Valores, said in a telephone interview from Sao Paulo. “The economy is coming in even weaker than anticipated.”

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Emerging Markets-Brazil interest rates rally on central banker’s remark

Walter Brandimarte – Reuters, 6/17/2015

Yields paid on Brazil’s interest rate contracts rallied on Wednesday after a central bank director said recent progress in inflation expectations was “not good enough,” while Latin American currencies weakened slightly ahead of a U.S. monetary policy statement.
Brazil’s interest rate futures for January 2017 rallied 8 basis points to 14.04 percent as comments from central bank director Tony Volpon led investors to bet rates would remain high for longer than expected next year.
In a meeting with investors in London, Volpon acknowledged a recent improvement in inflation expectations for 2016 but suggested more must be done to meet the government’s target of 4.5 percent.

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Amid Brazil’s economic crisis, consumers struggle with debt

Jenny Barchfield – ABC News, 6/15/2015

Francisco Xavier emerges from a payday loan shop, his brow more furrowed with worry than when he entered. His loan request was denied, and he has no idea how he is going to pay out-of-control bills, including credit card payments that gobble up nearly half his monthly income.

Xavier, a taxi driver, is among the rapidly burgeoning ranks of “super debtors” — people who rose into the middle class during Brazil’s nearly decade-long boom, but now find themselves drowning in debt as Latin America’s largest economy stalls, causing inflation to heat up and unemployment to rise.

Brazil’s top credit information bureaus estimate that as of April, more than 55 million Brazilians were behind on paying off credit cards or loans. That’s 37 percent of the adult population in a country of about 200 million people, and the numbers are rising. According to the SPC credit information bureau, the lists have grown by an estimated 700,000 people since January, when the top credit bureaus began working together on combined lists for the first time.

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Brazil analysts raise 2015 inflation forecast after May surprise

David Biller – Bloomberg, 6/15/2015

Brazil economists raised their 2015 inflation forecast by more than a quarter-point and lowered their outlook for economic activity as the central bank raises borrowing costs.

Analysts boosted their forecast for inflation to 8.79 percent from 8.46 percent, according to the June 12 central bank survey of about 100 analysts published Monday. The central bank’s top five forecasters increased their forecast to 8.9 percent from 8.47 percent.

Brazil is the only central bank among the Group of 20 nations raising interest rates as above-target inflation erodes consumer and business confidence. Economists in the survey estimate gross domestic product will contract 1.35 percent this year before expanding 0.9 percent in 2016.

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