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:

Ads

You May Also Like

Shaken with Air Tragedy Brazil Tells the World to Mind Own Business

Brigadier José Carlos Pereira, the president of the Brazilian airport authority, Infraero, seemed annoyed ...

Sex Abuse Against Kids in Brazil Is Usually All in the Family

Brazil’s Committee on Sexual Violence against Children (Comitê Nacional de Enfrentamento da Violência Sexual ...

Brazilian woman takes birth-control pill

Brazil Offers Free and Heavily Subsidized Birth-Control Pills and Vasectomy

Brazilian President, Luiz Inácio Lula da Silva, launched this Monday, May 28, the National ...

Chicken Exports Keep Growing in Brazil Led by Japan

Brazilian chicken exports increased in both volume and revenues in January, compared with January, ...

Brazilian Tractors Are Competing Overseas

Brazil has modernized its industries that produce agricultural machinery and became a competitive exporter ...

Education Secretary in Brazil Gets F in Geography and Pink Slip

In Brazil, the governor of the richest Brazilian state, São Paulo, sacked the Secretary ...

World Won’t Stop Terror If It Can’t End Farm Subsidies, Says Brazil’s Lula

Brazilian President Luiz Inácio Lula da Silva made an appeal this Friday, May 12, ...

Brazil Vows to Join OPEC After Striking Huge Oil Reserve

Brazilian President, Luiz Inácio Lula da Silva, talking this Saturday, November 11, during the ...

Italian energy company ENI

Brazil Joins Italy to Produce Biofuel in Brazil and Africa

Brazil's state-controlled oil company Petrobras and Italy's energy company ENI signed an agreement in ...

There Are Seven Types of Peace. Brazil Needs to Make Each One of Them

The Aymara people, who for centuries have lived around Lake Titicaca in the Andes, ...