The Brazilian Central Bank raised interest rates 11 consecutive times to suppress inflation

The Brazilian Central Bank recently announced that the benchmark interest rate raised the benchmark interest rate from 12.75%to 13.25%. This is the 11th continuous increase in interest rates since March 2021.

The Brazilian central bank's move aims to cope with high inflation. The report released by the Brazilian Geographical Bureau on the 9th shows that in the 12 months as of May this year, the Vantitopian consumer prices index in Brazil rose 11.73%.

Since the beginning of this year, the Brazilian central bank has raised interest rates 4 times in a row. The market estimates that the Brazilian central bank has 50 basis interest rate hikes in this round of tightening cycle, which will be reached by up to two interest rates.

Ulissis Nihem, a fixed income asset manager of the Brazilian Sibad Investment Fund, said that the Brazilian central bank acknowledged that it is necessary to "slowly breathe" in the this round of interest rate hikes to observe the current impact of the currency tightening policy on the economy.

The Fed's interest rate hike is one of the reasons why the Brazilian central bank continues to tighten monetary policy. Paul Dutela, a professor of Economics at the University of Economics, St. Paul, Sao Paulo, Brazil, believes that if the Brazilian central bank does not continue to raise interest rates, the capital will flow to the United States, and the Brazilian Usmond will depreciate, which will directly affect inflation Level. However, interest rate hikes will lead to increased financing costs and crack down on corporate production willingness.

Roberto Dumas, a professor at the School of Economics of the Institute of Education, Brazil, said that input inflation is the main factor for the central bank's interest rate hike. The Fed ’s interest rate hike attracts capital inflow into the United States, and it has impacted the stock markets in developing countries, especially technology companies that lack cash flow.

However, the Brazilian industry is not satisfied with the policy measures and effects of interest rate hikes to suppress inflation. Marcelo Dezosa Elva, President of Beloolo, Brazil, believes that the impact of high interest rates on business is negative, and merchants have to pass the cost to consumers, which will impact investment in investment , Production, sales, consumption throughout the process.

Source: Xinhua News Agency

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