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MNI INTERVIEW: BCB May Speed Up Hikes After Fiscal Package

Alexandre Andrade, director at the Independent Fiscal Institution (IFI) of Senate, speaks with MNI in an interview.

MNI (BRASILIA) - Brazilian government spending cuts seen as potentially inadequate to control the budget deficit will make it harder for the central bank to combat inflation due to depreciation of the real, and could force it to accelerate the pace of rate hikes if inflation expectations deteriorate, Alexandre Andrade, director at the Independent Fiscal Institution (IFI) of Federal Senate, told MNI.

The Central Bank of Brazil has already boosted the size of its rate increases to a half point from a quarter point at its most recent meeting, leaving the Selic rate at 11.25%. But now, it looks like 50 basis points per meeting might not be enough. (See MNI INTERVIEW: BCB To Keep 50BP Pace in December -Goldenstein)

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MNI (BRASILIA) - Brazilian government spending cuts seen as potentially inadequate to control the budget deficit will make it harder for the central bank to combat inflation due to depreciation of the real, and could force it to accelerate the pace of rate hikes if inflation expectations deteriorate, Alexandre Andrade, director at the Independent Fiscal Institution (IFI) of Federal Senate, told MNI.

The Central Bank of Brazil has already boosted the size of its rate increases to a half point from a quarter point at its most recent meeting, leaving the Selic rate at 11.25%. But now, it looks like 50 basis points per meeting might not be enough. (See MNI INTERVIEW: BCB To Keep 50BP Pace in December -Goldenstein)

Keep reading...Show less