Brazilian Central Bank Raised Interest Rates

Brazilian Central Bank raised interest rates. This step is expected to add pressure on the Brazilian currency that are determined to rise against the dollar so that a new problem for exporters. “The Monetary Policy Committee of the Central Bank of Brazil decided to increase interest rates by unanimous vote,” said Central Bank of Brazil in a statement quoted by AFP.

The decision to raise interest rates had been predicted by market watchers after seeing the inflation rate continues to strengthen. Last year, inflation reached 5.91 percent Affairs Samba, well above the government target of 4.5 percent.

On the other hand, the President of Brazil Dilma Rousseff just replaced Luiz Inacio Lula da Silva promised to reduce the number inflation. She also claimed to be stuck with ever-increasing consumer prices. For the citizens of Brazil, rising interest rates will make the purchase via credit becomes more expensive.

However, this will further increase the attraction of foreign investors that mortgage interest rates at higher levels than other major economies. As for exporters, the monetary authority steps can make the price of commodities, such as iron ore, soybeans, oranges, and coffee is more expensive in the market dunia.Ini because of real exchange rate against the dollar certainly come up. Rousseff earlier warned that the government will implement measures to halt rising prices.

However, many observers say that the government will only provide short-term solution. Meanwhile, way out in the long run should be done through reductions in government spending has ballooned in recent years.

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