Overheating?

central bank
Brazil
Author

Ben

Published

October 15, 2024

A parallel between BCB and Fed?

Giles’ Central Banks News Letter

  • Maybe there’s a hard-to-miss parallel between the Brazilian and the US economies, in terms of their cycles. Brazilian one seems to be about a year in advance.

    • BCB, the Brazilian central bank, is seeing the economy overheating and started raising rates.
    • While Lula was opposed to the previous governor, Neto, preferences for higher rates, he’s silent with the current one, Galipolo, who switched the position to align with Neto’s hawkish stances. So maybe, as far as their people are put in place, populist leaders are okay with the actual policies not coming their way?

  • The US market, of course, is different than Brazil’s, in that the records read much more optimisically.

    • But it is also true that excess demands are emerging. Fed, for now, seems to see this more of a blip than something systematic.