Brazil’s Vicious Cycle: Breaking Out Of It Will Be Hard To Do
Crédito y Caución | In March 2021, Brazil’s central bank started its rate hiking cycle. This has raised investors ́ concerns thatgovernment finances will deteriorate, as they are highly sensitive to shifts in interest rates.•Worries about the credibility of a constitutional spending ceiling, a key fiscal anchor, are adding to those concerns.•The risk of higher fiscal deficits and a depreciating currency have increased inflationary pressures, forcing thecentral bank to lift…