BRAZILIAN MACROECONOMIC OVERVIEW – MAY 2022 EDITION

The size of the monetary squeeze, abroad and at home
Inflation remains high, surpassing expectations and breaking records in many countries. In the eurozone, it is at an all-time high. In the United States and United Kingdom, the rates are the highest in four decades. Finally, the world’s main central banks have changed their stance and abandoned their argument that the rise in prices is “transitory” and will sort itself out. They have started to accept that it is high time to abandon the expansionism that has characterized monetary policy in their countries in recent years.
Interest rates have begun to rise and they will continue to do so, central banks have said. The question that arises now is how much will rates rise, and for how long. In Brazil, too, although to a much lesser degree, this same question is on the agenda. Once again, inflation is set to significantly exceed the top of the target range. So, how far will the Brazilian Central Bank raise the benchmark Selic interest rate?
Enjoy the reading of the full report!
