Kenneth Rapoza – Forbes, 04/25/2016
Inflation is down nearly 100 basis points from a few months ago, but the Central Bank of Brazil has no intention of lowering interest rates. Investors should take this coming Wednesday’s meeting as a cue whether or not there is a growth strategy anywhere in Brasilia.
Nomura Securities said that they are forecasting the Bank to keep rates at 14.25% even though inflation is coming down. Brazil’s rolling 12-month inflation was as high as 10.7% in January. It’s currently 9.4%. Nomura has close ties to Brazil’s central bank and is good gauge of which way the wind is blowing on the monetary policy committee.
Brazil’s economy, expected to contract by around 3.5% again this year, is facing a massive political crisis. It would be good if the central bank could be more independent and cut rates to boost growth. On the other hand, sentiment among Brazil’s business class is so burned out with the twin crises of politics and economics that it is going to take more than a rate hike to improve things.
Rafael Romo – CNN, 04/21/2016
Brazilian Vice President Michel Temer is technically in charge of Brazil — albeit temporarily. How is this possible? It’s all thanks to a particular clause in the Brazilian Constitution which implies that if the president in power leaves the country, the vice president assumes control of the executive power.
His former running mate and current political rival, embattled President Dilma Rousseff, is visiting the United States and plans to attend a climate conference in New York on Friday. That means Temer is not only calling the shots at home, but has effectively become the president … until she returns.
Zack Beauchamp – Vox, 04/21/2016
Brazilian President Dilma Rousseff is in the midst of a stunning fall from grace.
In 2013, Rousseff had a roughly 80 percent approval rating. Today, it’s around 10 percent. Just this Sunday, one house of Brazil’s Congress voted to impeach her.
The story behind Rousseff’s collapse is extraordinary — but also a bit complicated. If you’re just learning about it, it might be a little bit difficult to parse why Rousseff is in so much trouble, and why this is all blowing up now.
Paulo Sotero, Lucrecia Franco, Ligia Maura Costa, Bernardo Sork, Fabio Ostermann – CCTV, 01/28/2016
Political upheaval, economic downturn and corruption scandals: Brazil is at a crossroads.
So, what’s the way forward for a Latin American giant in crisis? 2015 was not Brazil’s easiest year. Several widespread protests across the country called for change. Confidence in president Dilma Rousseff reached a record low. A scandal at state-run oil conglomerate Petrobras exposed corruption. All while the economy stagnated and began a free fall. 2016 hasn’t started off much better either. For a Brazilian perspective, from Rio de Janeiro, The Heat was joined by CCTV America’s Lucrecia Franco. To discuss the current political and economic climate: Ligia Maura Costa is a professor of legal studies at Escola de Administração de Empresas de São Paulo. Bernardo Sorj is a professor of Sociology at the Federal University of Rio de Janeiro. To discuss Brazil’s future and the youth movement: Fabio Ostermann is one of the founders and a former coordinator of Movimento Brasil Livre. Paulo Sotero is director of the Brazil Institute of the Woodrow Wilson International Center for Scholars.
Watch the video…
Arnaldo Galvao – Bloomberg Business, 02/01/2016
Embattled Brazilian President Dilma Rousseff may get a new lease on political life when legislators return to work Tuesday to discuss impeachment proceedings against her. Just don’t expect much help from them on the economy.
Following a six-week recess, much of the fervor surrounding the political crisis has died down, and with it the drive to oust Rousseff. Yet with consumers and businesses battered by a deepening recession, legislators have little appetite for the spending cuts and tax hikes administration officials say are needed to restore investor confidence. That’s especially true ahead of municipal elections in October, party leaders and political analysts said in interviews.
The mood could still sour against Rousseff and upset her chances to stay in office if discord increases within the ruling coalition, unemployment surges or the corruption probe that has rattled Congress expands further. But even the politician who stands to benefit the most from the president’s ouster, Vice President Michel Temer, says the mood in Congress has shifted away from ousting Rousseff, according to the G1 news site
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.
David Biller – Bloomberg Business, 01/19/2016
Brazil won’t return to growth until at least 2018 after two years of recession and one of stagnation, marking the first time in over a century that Latin America’s largest economy fails to expand for that long, the International Monetary Fund said.
The IMF cut Brazil’s 2017 economic forecast to stagnation from 2.3 percent growth as it updated its World Economic Outlook, last published in October. Gross domestic product will shrink 3.5 percent this year after contracting 3.8 percent in 2015, it said Tuesday. That would be the first time since 1901 that Brazil has back-to-back recessions deeper than 3 percent, according to data from the government’s economic research institute, known as IPEA.
The estimates mean the Washington-based lender is now more pessimistic than all but four of the 23 economists surveyed by Bloomberg, whose median estimate is for Brazil to expand 1 percent next year.