Inflation in Brazil could reach over seven percent this year.
(Photo: imago stock & people)
Frankfurt Brazil’s central bank is currently one of the most active in the world. For the sixth time this year, it raised the key rate from 6.25 to 7.75 percent on Wednesday. The increase of 150 basis points is the strongest there in almost 20 years.
Other emerging markets have also tightened their monetary policy considerably this year. Last week, Russia raised the key rate to 7.5 percent for the sixth time this year, and in Mexico it is 4.5 percent after three increases. All of these countries have long since passed what Europe and the USA still have to do: the turnaround in monetary policy. The European Central Bank (ECB) and the US Federal Reserve are still wrestling about when to shut down their massive bond purchases before even thinking about rate hikes.
“The rate hike cycle in the emerging markets is in full swing,” commented the chief economist of the International Banking Federation (IIF), Robin Brooks, on the rate hike in Brazil on Twitter.
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