According to Commerzbank economists, it is likely that new comments by President Lula da Silva, which could have been seen as interference in monetary policy, have put additional downward pressure on the BRL.
The latest events in Brazil cause some concern
“Lula confirmed yesterday his opinion that the current levels of the key rate of 13.75% are too high. In his opinion, it is not justified, and he asked companies to complain about excessive financing costs.”
“If doubts were raised about the autonomy of the central bank while the government is also following an expansionary fiscal policy, that would not be good news for the BRL. That is why the recent events in Brazil are causing some concern.”
“We can only hope that Lula backtracks again. If he continues to whip the same horse, the BRL could come under further depreciation pressure.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
