About the Brazilian Bank interest cut

The former Central Bank president Gustavo Loyola, warned through O Estado de Sao Paulo that the central bank may have rushed to cut its interest rate:

Calibrated rate cut?

If it was just a reaction to the negative data of GDP in 2011 and industrial production in January 2012, I think central bank really would have precipitated.

O movimento, talvez não necessário, pode trazer dor de cabeça para o BC, caso a inflação se acelere no fim do ano.

To appreciate the dollar?

Although government officials outside the Central Bank, said the drop in interest rates has come to hold the appreciation of the Brazilian real against the Dollar, but this this brings more uncertainty for economic agents, and become unproductive on long term.

A excessiva intervenção no mercado cambial, ao não permitir a apreciação do câmbio, dificulta o combate à inflação e a própria queda da taxa de juros.

Expectations for GDP and $ exchange in 2012

For GDP, around 3.2% and 3.3%. Regarding the exchange rate, the uncertainties are larger, mainly because the government threatens to use heavy tools if the real tends to appreciate. I would say that the dollar this year, on average, should not stray far from R$ 1.75.

About Rami Alhames

I'm a Syrian Brazilian, Freelance Translator and Social media contributor @GlobalVoices @GVinArabic, Meedan, in Portuguese, Arabic and English.
This entry was posted in Econmoy & Business, English, Portuguese and tagged , , , . Bookmark the permalink.

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