Brazil analysts cut their interest rate forecasts for this year and next after central bankers launched a monetary easing cycle with a bold half-a-percentage point cut last week, Bloomberg News reported. The benchmark Selic will fall to 11.75% by December, down from the prior estimate of 12%, according to a weekly central bank survey of economists published Monday. Analysts cut their key rate forecast for next year to 9%. Consumer price estimates for this year were left unchanged at 4.84%. Annual inflation will slow down to 3.88% in 2024 and 3.5% in 2025.
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President Luiz Inacio Lula da Silva expects Brazil’s central bank to begin cutting interest rates on Wednesday, saying he “can only hope” that policymakers launch the easing cycle he has demanded for months, Bloomberg News reported. Analysts widely anticipate that the central bank will begin lowering the benchmark Selic from its six-year high of 13.75% when its monetary policy committee concludes its August rate decision meeting later in the day.
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Brazil’s credit score was upgraded by Fitch Ratings as the emergence of a new fiscal framework stokes expectations for further reform, Bloomberg News reported. Fitch raised the South American nation’s debt rating to BB from BB- on Wednesday, putting it two notches below investment grade and on par with Guatemala and Vietnam. The outlook is stable. “Brazil has achieved progress on important reforms to address economic and fiscal challenges,” analysts including Todd Martinez and Shelly Shetty wrote in a statement.
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Brazil’s petrochemical giant Braskem said Friday it had reached a $356 million settlement with a coastal city where four decades of the company’s rock salt mining destroyed five urban neighborhoods and displaced tens of thousands of people, the Associated Press reported. Around 200,000 people in the Alagoas state’s capital of Maceio were affected by the excessive extraction of rock salt, according to the Brazil Senate’s website. In recent years, several Maceio communities became ghost towns as residents accepted Braskem’s payouts to relocate.
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Brazilian state-run oil company Petrobras said on Wednesday it will analyze all offers presented for Braskem but believes that discussions on a potential sale of the petrochemical producer are still far from over, Reuters reported. Petrobras is one of Braskem’s main shareholders alongside conglomerate Novonor, which holds a controlling stake in the firm but has long looked to sell it to repay creditors after entering bankruptcy protection. Three offers so far have been presented for control of Braskem: a joint bid from Abu Dhabi's ADNOC and U.S.
Rio de Janeiro-based electricity distributor Light SA has submitted a plan to restructure about 11 billion reais of debt, according to a securities filing late on Friday, Reuters reported. Light filed for bankruptcy protection in May, becoming the latest high-profile Brazilian firm to do so in recent months. The plan, which has yet to be approved by the lenders of the company, foresees a number of repayment and capitalization options. Light said it will seek to raise at least 1 billion reais ($209 million) of new funds as part of its reorganization plan.
Brazil's annual inflation in June fell to its lowest level since September 2020, data from statistics agency IBGE showed on Tuesday, renewing bets that an interest rate cut is around the corner as consumer prices continue to trend down, Reuters reported. Annual inflation in Latin America's largest economy slowed to 3.16% in June from 3.94% in May, in line with a market consensus of 3.17%. Prices fell 0.08% on a month-on-month basis, the first deflation registered since September of last year.
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President Luiz Inacio Lula da Silva's government will not wait for Brazil's Congress to finish voting on a tax reform related to consumption before submitting its proposal for an income tax reform, Finance Minister Fernando Haddad said on Monday, Reuters reported. Haddad said in an interview with podcast "O Assunto" that the planned change in income tax, a long-standing agenda item for Lula's leftist Workers' Party, represents a crucial element of the government's plans to zero its primary budget deficit next year.
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Brazil's currency will likely enjoy some support in the near term from faster economic growth and progress on reforms, despite the prospect of less favorable interest rate spreads ahead, a Reuters poll showed, Reuters reported. The real appreciated last month to its firmest level in a year after several forecasts were improved and key fiscal changes proposed by the government of President Luiz Inacio Lula da Silva made headway in congress. The real is seen gaining a further 0.6% in three months to 4.81 per U.S.
Private economists in Brazil anticipate deeper monetary easing this year and improved inflation prospects until 2026 following the government's decision to maintain the country's inflation goal at 3%, a weekly central bank poll showed on Monday, Reuters reported. President Luiz Inacio Lula da Silva has consistently blasted the country's central bank for keeping interest rates at a cycle-high of 13.75% even as inflation slows. During the first months of his administration, he also criticized inflation targets as too low, arguing that they led to an overly restrictive monetary policy.
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