Brazil’s Inflation Plunges, But Central Bank Won’t Say ‘Job Done’
- Tax hikes boost prices as Lula backs $27 billion spending bill
- Traders bet central bank will hike again amid fiscal worries
Brazil's Central Bank President Roberto Campos Neto
Photographer: Tuane Fernandes/BloombergThis article is for subscribers only.
After some of the world’s most aggressive interest-rate hikes, Brazil’s inflation has plunged by half in the past six months. That sounds like mission accomplished — except the central bank doesn’t see it that way.
In fact, even though the bank’s benchmark now offers an inflation-adjusted return of almost 8% — a global high among major economies – traders reckon its next move is more likely to be another bout of monetary tightening than a victory-lap rate cut.