tag:blogger.com,1999:blog-34399666.post7810683027369807465..comments2023-03-27T06:27:12.961-07:00Comments on Brazil Economy Watch: Brazil Central Bank Raises Interest Rates to 12.25%Unknownnoreply@blogger.comBlogger2125tag:blogger.com,1999:blog-34399666.post-53545138639995212072008-06-05T23:05:00.000-07:002008-06-05T23:05:00.000-07:00Hi,"I wonder where it will end up,"Yes, interestin...Hi,<BR/><BR/>"I wonder where it will end up,"<BR/><BR/>Yes, interesting isn't it. Very hard to say. Personally I can't help thinking that the Real will be a major global currency at some point, in 10 to 20 years perhaps, it depends on growth.<BR/><BR/>"And then, the later question becomes: what happens if/when the rates there ever actually become accommodative to growth?"<BR/><BR/>I think this is a very interesting question. I think it is very unlikely to happen in the short run, since this does seem to be the "Lula revolution" in the sense that the cb does seem to be running a serious and independent monetary policy, and the government do see to have taken head of the IMF advice that they need primary fiscal surpluses to drain demand. <BR/><BR/>In this sense they seem to be streets ahead of most of the people in Eastern Europe, who seem to think that all that inflation and rising wage costs simply form part of a Harrod-Balassa "catch up" process.<BR/><BR/>Brazil seems to be a much more serious entity here. (I think Chile is also another positive case in Latin America).<BR/><BR/>Basically it is hard to see accomodative policy in Brazil in the short term. Essentially they are trying to put a brake on the boost that they are getting from global growth, which in some sort of circular fashion is also itself being fed by them (and others in the so called BRICs group).<BR/><BR/>What we don't know however is when this apparently virtuaous cycle (forgetting all the inflation it is producing for a moment) will come to an end. It could be sooner, or it could be later, it is very hard to say at this point.<BR/><BR/>When the slowdown does come, and the price of oil and other commodities falls back in a serious way, then I imagine we will see a more accomodative policy, just as it should be.Edward Hughhttps://www.blogger.com/profile/10384039867580949531noreply@blogger.comtag:blogger.com,1999:blog-34399666.post-45122779429567853352008-06-05T13:09:00.000-07:002008-06-05T13:09:00.000-07:00More strength for the Real.. I wonder where it wi...More strength for the Real.. I wonder where it will end up, coming all they way from 3-1 just 5 years ago.<BR/><BR/>I wonder at what point does this rather drastic shift affect them (the currency has almost doubled already, and will likely go higher).<BR/><BR/>And then, the later question becomes: what happens if/when the rates there ever actually become accommodative to growth?Anonymousnoreply@blogger.com