WSJ, Bloomberg and Reuters project interest rate cuts in Brazil – 07/12/2023 – Nelson de Sá

In western financial coverage, inflation data point to the reduction of the rate by the Central Bank. In the Wall Street Journal, “June inflation in Brazil reinforces interest rate cut perspective” (below).

On Bloomberg, “Inflation in Brazil falls below the target, paving the way for cut”. In the Reuters agency, “Brazilian inflation hits lowest level in almost three years; interest rate cut on the horizon”.

The Financial Times says that “investors price imminent cuts in interest rates in some large emerging economies”, highlighting Latin America, and projects a rapprochement with developed economies.

“While the West tightens interest rates”, says the newspaper, Brazil and other developing countries are going in the opposite direction, making the difference in the cost of public debt the lowest in 16 years. From an Allianz Global Investors executive:

“Investors are recognizing the narrowing credibility gap between policymakers. Emerging markets have done a good job of dealing with the inflationary shock and I’m not sure you can say the same for some Western central banks.”

According to the FT, “prospects in the developing world also look relatively strong: in a note to clients, Bank of America predicted that emerging countries will grow 4.1% in 2024, ahead of 0.5% in the US, the biggest difference in one of each”.

LIVING ON LOAN

American debt prompted an editorial in the New York Times, “America is living on borrowed money”:

“America is now borrowing heavily to meet basic obligations. It is increasingly unsustainable. A growing share of revenue goes straight out the door in the form of interest payments. The era of low rates is over. It will require painful choices. But failure making choices also has a price.”

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