Central Banks
Brazil Central Bank Sees Investors Overly Concerned About Budget
- Board members pushing back against bets on 75-point rate hikes
- Plan to rein in spending could provide positive fiscal shock
The Central Bank of Brazil headquarters in Brasilia.
Photographer: Ton Molina/BloombergThis article is for subscribers only.
As investors grow worried about Brazil’s fiscal outlook, selling off the real and betting on even bigger interest rate hikes, the central bank has started to signal that budget concerns are exaggerated.
The finance ministry and the monetary authority share the view that a much—anticipated plan to cut public spending will shore up investors’ confidence in Brazil’s fiscal rules and alleviate pressure for a more aggressive tightening campaign, according to a member of President Luiz Inacio Lula da Silva’s economic team.