Brazil attacked inflation early

Brazil commenced raising interest rates in the 1st quarter of 2021. The central bank rate climbed from 2% to 13.75% which represents a 6-fold increase.

Brazil conducted 12 rate hikes.

The U.S. commenced hiking rates 12 months later year later, in the 1st quarter of 2022. The fed funds rate have risen by a factor of 9 (from 0.5% to 5%).

The U.S. has raised interest rates 9 consecutive times.

Brazilian’s carry a Household Debt to GDP ratio of 34%.

The Americans have 75%

Aussies are sitting on at 114%

The chart below shows the Brazilian 10 year bond yield compared to the Brazilian inflation rate.

Brazil addressed their rate hikes much earlier and when coupled with the halving of many commodity prices since their 2022 peak) has seen the Brazilian inflation fall from 12% to 5.6%

March 29, 2023

by Rob Zdravevski

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