Fearing Inflation, Brazil Raises Interest Rates to 17.75%

Inflation


Brazilian markets ended modestly higher, helped by some modest gains on Wall Street. Additionally, the markets were able to advance despite a sharp increase in oil prices following the latest U.S. inventory data. In Brazil, attention was fixed on the central bank’s decision on monetary policy, which came out after the close of trading.

Brazil’s benchmark Bovespa Index edged up 12.70 points or 0.05%.


Leading off, the United Nations’ Economic Commission for Latin America and the Caribbean said that growth for the region will be about 5.5%, well above many earlier forecasts.


Demand for raw materials from China and the U.S. was helping to propel growth in the region. The group sees more moderate growth of 4% for the region in 2005.


Brazilian stocks rose modestly, as investors awaited the central bank’s interest rate decision. After the close, the central bank raised interest rates by 50 basis points to 17.75% in order to contain inflationary pressures.


There was some hope that signs of moderating inflation may allow the central bank to raise rates by a smaller amount.


Meanwhile, October retail sales were up 8.5% compared with the year ago period, according to the Brazilian government.


The result marked the eleventh straight monthly year-on-year increase amid a surge in Brazil’s economy following last year’s stagnation. The rise in retail sales was down from September’s 9.3% increase.


On the corporate front, CVRD was active after the company announced plans to buy back US$ 198 million, or 62.3%, of its US$ 300 million 2007 bonds. The iron ore firm said it is taking advantage of current strong cash flows to lower debt and strengthen its balance sheet.


Also, struggling airline Viação Aérea Rio Grandense (Varig) surged after the government said it will take control of the troubled airline by the end of the week as part of a plan to restructure the company’s US$7 billion in debts.


In research notes, a major U.S. investment bank upgraded shares of Eletropaulo to “neutral” from “underweight.” Also, another investment bank named Telesp and Telesp Celular its top picks in Latin America for 2005.


Thomson Financial Corporate Group
www.thomsonfinancial.com


PRNewswire

Tags:

  • Show Comments (0)

Your email address will not be published. Required fields are marked *

comment *

  • name *

  • email *

  • website *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Ads

You May Also Like

Brazil Urged by World Trade Organization to Reduce Trade Barriers

The World Trade Organization (WTO) said in a report released this Monday (March 9) ...

Obvio, Brazilian car that runs on gas, ethanol and electricity

It’s Obvio: US Sells Trybrid Car from Brazil

American-based Zap will showcase a new "trybrid" sports car concept from Brazil that uses ...

RAPIDINHAS

Sex The  Brazilian  Touch After all, the Bobbit episode does have its Brazilian connection. ...

African mother cares for sick child

US to Join Brazil in Fight Against Malaria and Tuberculosis in Africa

Brazilian President, Luiz Inácio Lula da Silva, and his US counterpart, George Bush, agreed ...

Despite Exporting 13% Less Brazil’s Long Steel Leader Gets US$ 400 Million Profit

Gerdau, Brazilian leader in the production of long steel in the Americas, had a ...

Brazil Becomes World’s Number 1 Country for Adventure Tourists

In the tropics, Brazil occupies an area of 8.5 million square kilometers (3.3 million ...

In Brazil, I Found Out, Magic Is an Everyday Reality

There is a church in Curitiba that blesses cars. When I first heard this, ...

Economy: Brazil Down to 15. Behind India.

From 1998 to 2003, Brazil fell from the 8th to the 12th position among ...

Brazil Expecting Close to US$ 1.5 Trillion in Investments Up to 2011

Private and public investment in dynamic sectors of the Brazilian economy should grow 18% ...