(Bloomberg) — Brazil central bank President Roberto Campos Neto said interest rate cuts starting in June would be in line with plans of bringing inflation around target, as policymakers warn of a growth slowdown next year.
When taking into account projections from the bank’s weekly economist survey, which points to borrowing cost reductions starting in the middle of 2023, Brazil would be able to bring consumer prices around the official goal, Campos Neto said at a virtual press conference on Thursday.
“With the first rate cut in June, we accomplish our goals,” he said, adding that the bank’s recent cycle of rate hikes is having an effect on the economy.
“Looking at swap rates, seeing what’s priced in and comparing to the weekly survey, the difference is small,” he said. “Break-even inflation has fallen recently.”
Earlier on Thursday, the bank raised its 2022 growth forecast to 2.7% from 1.7% in June, according to its quarterly inflation report. Still, the monetary authority said it sees expansion at 1% next year, reflecting a global downturn and local borrowing costs that are currently near a six-year high.
Economists in the survey see gross domestic product growing 2.67% this year and 0.5% next.
Policymakers led by Campos Neto are holding rates steady at 13.75% after an 18-month long cycle of aggressive borrowing cost hikes. Two out of the nine board members voted last week for another rise to “strengthen” efforts to bring inflation to target. On the other hand, directors said the full effect of tighter monetary policy has yet to be seen in the economy.
Most swap rates, which indicate investors expectations for monetary policy, reversed gains in early afternoon trading on Thursday, as traders reacted to Campos Neto’s comments on rate cuts.
Bank Vigilance
In their report, central bankers wrote family consumption will increase 3.9% this year, above the prior forecast of 1.7%, as job wages and extra earnings from new fiscal stimulus boost disposable income. Real salaries should continue to improve in coming months, given the country’s indexation policies.
The bank’s inflation estimates were kept unchanged from the minutes of their September policy meeting, at 5.8% for this year and 4.6% in 2023, both above targets. Consumer prices are expected to rise 2.8% in 2024, within policymakers’ tolerance range.
Brazil’s central bank targets inflation at 3.5% this year, 3.25% in 2023 and 3% in 2024.
The central bank reiterated it will remain vigilant and assess if keeping the interest rate high for a “sufficiently long period” is enough to bring inflation back to target. They remain concerned about rising services prices and cost-of-living measures that are still above historic averages.
Read More: Brazil Consumer Prices Drop as Policy Makers Eye 2024 Target
Latin America’s largest economy is showing the first signs of easing consumer price pressures. Annual inflation slowed to 7.69% in mid-September, pulled down by the government’s recent gasoline tax cuts and lower commodity prices.
At the same time, many analysts are lifting their 2022 growth estimates despite a hiking cycle that added 11.75 percentage points to borrowing costs. Gross domestic product grew more than expected in the second quarter, while unemployment has dropped to the lowest since 2015.
Read More: Brazilians’ Outlook on Economy Improves Ahead of Vote: Datafolha
Brazilians will vote in the first round of presidential elections on Sunday, and the economy is a top focus point. Both incumbent Jair Bolsonaro and former President Luiz Inacio Lula da Silva back greater social spending, pledging to boost payouts to the poor.
(Re-casts story with comments from central bank president.)
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
Chuck Robel, longtime GoDaddy board chair, is planning to retire from the board next year. The Tempe-based company has already named his successor.
The London Metal Exchange plans to launch a discussion paper on whether it should block deliveries of Russian aluminum to its warehouses.
(Bloomberg) — The European Central Bank should raise interest rates by another 75 basis points when it next sets policy in October, with steps likely to get smaller after that, according to Governing Council member Martins Kazaks. Most Read from BloombergApple Ditches iPhone Production Increase After Demand FaltersMacKenzie Scott Files for Divorce From Science Teacher HusbandTrump Refuses to Delay Florida Deposition in Phone-Fraud Case Despite HurricaneNord Stream Gas Leaks May Be a New Disaste
Bed Bath & Beyond’s latest quarter was as cheerless as the company previously telegraphed. The company’s same-store sales declined 26% in its quarter ended Aug. 27 compared with a year earlier, in line with the previous update. Net loss was $366.2 million, nearly three times the number Wall Street analysts had penciled in.
(Bloomberg) — Kenya’s central bank raised its benchmark interest rate by the biggest margin in more than seven years to anchor inflation expectations at its first policy meeting since newly-elected President William Ruto took power this month.Most Read from BloombergMacKenzie Scott Files for Divorce From Science Teacher HusbandTrump Refuses to Delay Florida Deposition in Phone-Fraud Case Despite HurricaneApple Ditches iPhone Production Increase After Demand FaltersStocks Plummet to 22-Month Low
Deutsche Post DHL stock is down 45% this year, but shares might be worth a look. The global package-delivery giant said it would meet its full-year earnings forecast range.
Wall Street is on a roller coaster again, as investors try to navigate the path between high inflation and the Fed’s aggressive interest rate hikes. The former is raging – whether you blame Russia or Biden, the fact of high inflation can no longer be avoided – while the latter is rising – but whether it is rising fast enough to blunt inflation is yet to be determined. Jim Cramer, the well-known host of CNBC’s ‘Mad Money’ program, takes a hint from the bond market, where the US Treasury 2-year no
Yahoo Finance Live's Seana Smith looks at several trending stocks in the after-hours trading session.
The stock market took a U-turn on Thursday, erasing all the gains it made on Wednesday as investors continued to worry about the impacts of high inflation and the interest rate hikes that central banks are implementing to get it back in check. As of 11:40 a.m. ET, the S&P 500 was down 2.1%, and the tech-heavy Nasdaq has lost 2.9%. Companies tied to the electric vehicle industry were getting hit especially hard, with Rivian Automotive (NASDAQ: RIVN) down 5% and Chinese luxury EV-maker Nio (NYSE: NIO) falling 8.2%.
Market instability is the biggest risk to central banks globally, replacing inflation, owing to massive amounts of leverage. Market stability affords the Fed the space needed for the most aggressive rate-hiking campaign since the late 1970s. The BOE on Wednesday was forced to start buying bonds to solve a potential crisis with U.K. pension funds.
Shares of several real estate stocks and mortgage real estate investment trusts (REITs) struggled today as mortgage rates soared. Shares of the real estate brokerage Redfin (NASDAQ: RDFN) traded close to 7% lower as of 11:50 a.m. ET today. Meanwhile, shares of mortgage REITs AGNC Investment (NASDAQ: AGNC) and Annaly Capital Management (NYSE: NLY) traded more than 5% and nearly 10% lower, respectively.
Is this enough to stop conflicts of interest? To a certain extent.
Shares of Carmax dipped sharply after the company missed second-quarter earnings expectations.
Shares of semiconductor specialist Advanced Micro Devices (NASDAQ: AMD) were falling today, likely in response to new data on U.S. jobless claims. Investors are processing the latest employment data that showed a stronger-than-expected labor market. Instead, it appears that AMD shareholders were reacting to the latest jobless claims report.
On the bright side of what has increasingly been a terrible year for stocks is that over time, history is filled with self-corrections and comebacks.
The broader market was down sharply and that was certainly impacting Carvana stock. As of 12:01 p.m. ET, Carvana stock was down 18.5%. First, let's recognize that Carvana is a volatile stock to begin with.
The Dow Jones Industrial Average sold off Thursday after key economic data. Apple stock fell on a downgrade.
Wall Street deal-making isn’t doing too hot.
While the U.S. has hit many of the benchmarks that signify an economic downturn, other metrics have defied the trend, leading many to debate whether the economy is actually in a recession. A key economic indicator released early Thursday seemed to tip the scales toward those arguing that it is in a recession. To be clear, there was very little in the way of company-specific news driving these technology stocks lower.
While EV-minded investors were accelerating into shares of QuantumScape (NYSE: QS) on Tuesday, they're shifting into reverse today. As of 12:02 p.m. ET, shares of QuantumScape are down 8.1%. In addition to the overall dour sentiment pervading the markets today, investors are choosing to unplug from QuantumScape's stock after learning of an analyst's recent outlook on the company and his price target on its shares.