Thursday, June 05, 2008

Brazil raises rates....

The Brazilian Central Bank raised rates last night as expected 50 bp to 12.25%.

``The central bank's rate decision today reinforces policy makers' commitment to its inflation target,'' said Roberto Padovani, senior strategist for Banco WestLB AG in Sao Paulo.

This move came as no surprise as inflation in this region has been on the rise. Just this past weekend the magazine VEJA ran a feature article talking about the dormant inflation "Dragon" under the headline ``He just opened his eyes.''

I look for more rate increases going forward topping out at about 13.5-14.0%. This of course depends on my other predictions of a slowing global economy coupled with lower crude prices.




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