Thursday, February 25, 2021

Former Treasury secretary advocates raising interest rates to help the economy. Understand why

Facebook
Twitter
Pinterest
WhatsApp
Telegram

Must Read

Head of the Department: Laser coding will not change the content of the traditional stamp of precious metals

The stamp includes the caliber, gold badge, and date mark spread over 3 engraved squares The Stamps and Weights...

Woman’s heart curry .. served to uncle .. – Prime Time Zone daily (Prime Time Zone): Latest Telugu News | Breaking news

Prime Time Zone, Webdesk: In Oklahoma, USA, a man behaved extremely cruelly. He killed a woman and took...

The Strength of Querer: After losing a baby, Ivan conquers a victory; know which

Ivan (Carol Duarte) will again have reasons to smile in The Force of Wanting. The aggression that will suffer...

An increase in the basic rate of Selic interest, which is at the lowest historical level of 2%, will be more productive for the Brazilian economy this year. The assessment is by the chief economist of Santander Brasil, Ana Paula Vescovi, who released the review of the economic scenario for this year.

Santander estimates that the Central Bank should start a cycle of high interest rates in the first half, with the Selic reaching 4% at the end of the year. At the end of this cycle, the interest rate should close at 6%, a scenario forecast for the end of 2022 or the beginning of 2023.

But an increase in nominal interest rates, instead of slowing the economy, as it increases the cost of money, could have the opposite effect.

– This is not something I normally say. But the drop in interest rates to 2% turned out to be counterproductive for the economy. This level of interest brought volatility to the dollar and stretched the curve of longer interest rates, which inhibits investment decisions. Incredibly, an increase in nominal interest rates may be more productive for the Brazilian economy, because it will curb the interest curve and reduce exchange rate volatility – says Vescovi.

For Vescovi, this year, vaccination, the return of mobility and the fiscal scenario will be decisive for the resumption of the economy and not monetary policy.

In Santander’s estimate, the government should spend R $ 25 billion this year, outside the spending ceiling, with the reissue of the emergency aid. But the expense will be temporary and can be compensated in time with the approval of fiscal measures, such as PEC Emergencial, which would bring savings of R $ 10 billion next year and in the following years.

Facebook
Twitter
Pinterest
WhatsApp
Telegram

Latest News

Head of the Department: Laser coding will not change the content of the traditional stamp of precious metals

The stamp includes the caliber, gold badge, and date mark spread over 3 engraved squares The Stamps and Weights...

More Articles Like This

Former Treasury secretary advocates raising interest rates to help the economy.  Understand why