Published on 04/09/2021 at 7:48 p.m.
–
Inflation soars in Brazil. The land of Palms has indeed experienced inflation that exceeds the ceiling set by the Central Bank, namely 6.1% over one year. The country’s economy has been weighed down by the Covid-19 crisis. The rise in consumer prices continued after the ceiling had already come close to being reached in February (5.2%), its highest level since January 2017. Monthly inflation rose to 0.93% , the highest for a month of March for six years.
This inflationary pressure makes a further hike in the key rate virtually inevitable at the next meeting of the Central Bank’s monetary committee in May, according to specialists. This rate, which had remained at its historic high of 2% since August 2020, was raised to 2.75% last month. A new increase could help curb inflation, but also risks slowing down the economic recovery in this country totally overwhelmed by the health crisis, with more than 345,000 lives lost by the Covid-19.
>> Read also – Brazil: Covid-19 out of control, death record
The central bank worries
“The Central Bank is clearly worried that inflation is above the ceiling, and it seems likely that the rate will be raised by 0.75 points to 3.50%,” said the consulting firm Capital Economics. Brazil’s GDP contracted 4.1% last year, the third worst decline in its history. But the largest economy in Latin America has resisted better than neighboring countries to the consequences of the pandemic, in particular thanks to aid paid to tens of millions of Brazilians.
However, experts seem less and less optimistic about a strong recovery this year, due to the health crisis which has reached catastrophic levels, with 4,249 deaths recorded in a single day Thursday, a record. The specialists consulted during the last weekly Focus survey of the Central Bank expect growth of 3.17%, against 3.26% a month ago.
–
