LatinNews Daily - 08 September 2022

In brief: Markets react to possible interest rate hikes in Brazil

*Declarations made by executives of Brazil’s central bank (BCB) regarding the possibility of further increases in Brazil’s benchmark interest rate (Selic), have affected the country’s financial markets. On 6 September, the main index for the São Paulo stock exchange (Ibovespa) fell more than 2% after BCB president, Roberto Campos Neto, highlighted in an event organised by newspaper Valor Econômico, that the “battle” against inflation has not yet been won, saying this was provoking “great concern”. In August, the BCB raised its benchmark interest rate by 50 basis points to 13.75%, in its 12th consecutive rate hike. Since then, however, market analysts had reduced their projections for future increases. BCB’s director of monetary policy, Bruno Serra, told Valor Econômico that he believes market analysts are being inconsistent by projecting steep declines in the country’s interest rates for 2023, while still forecasting high inflation for 2024.

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