The financial media is now asking for higher interest rates in Brasil. They claim it is needed to hold back inflation. Its like no one understands how money really works. Well, the big money will win, and interest rates will go up. When that happens, usually the stock market goes down. So stockholders beware! On the plus side, the Real should go up in value against the US dollar. Everyone will be too broke to take advantage of that though…
This is messy. With high unemployment, low GDP, devalued currency, high inflation, to increase interest rates is almost suicidal. It will hurt whatever was left of the economy, creating your typical stagflation. With Guedes in power, there won’t be any countercyclical measures, there will be procyclical ones, meaning digging ourselves into a bigger hole.
I think this time he will use the IMF and World Bank. He has been itching to go back to FHC days of an indebted country obeying foreign financiers…
Superjob there Guedes!