Brazil’s Inflation Speeds Past Forecasts After Key Rate Cut
Brazil's annual inflation accelerated more than expected in August, reaching 4.24%, as the central bank continues to cut interest rates in its efforts to boost the economy.
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Posted 8/25/2023, 1:04:30 PM
yahoo.com
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Euro zone inflation in August came in higher than expected at 5.3%, posing a challenge for the European Central Bank as it remains unchanged from the previous month.
US inflation remains above 3% as the cost of goods and services rose by 0.2% in July, prompting speculation that the Federal Reserve may freeze interest rates to manage inflation without causing a recession.
Brazil's GDP exceeded expectations, driven by strong consumption and oil and mining output, while Peru's inflation lowered to its lowest point in two years and Chile's economic activity increased for the first time in six months.
Central banks across major developed and emerging economies took a breather in August with lower interest rate hikes amid diverging growth outlooks and inflation risks, while some countries like Brazil and China cut rates, and others including Turkey and Russia raised rates to combat currency weakness and high inflation.
South Korea's annual consumer inflation accelerated to 3.4% in August, the fastest rate since early 2017, raising concerns for policymakers.
Inflation has decreased significantly in recent months, but the role of the Federal Reserve in this decline is questionable as there is little evidence to suggest that higher interest rates led to lower prices and curtailed demand or employment. Other factors such as falling energy prices and the healing of disrupted supply chains appear to have had a larger impact on slowing inflation.
Annual core inflation in Mexico slowed to a 20-month low in August, below market forecasts, as the central bank maintains high interest rates to curb price increases.
Inflation is expected to rise in August as oil and gasoline prices increase, putting pressure on the economy and potentially leading to higher interest rates and a stronger dollar.
The Consumer Price Index is expected to show an increase in inflation in August, with headline inflation rising to 3.6% and core inflation easing to 4.4%, but the market is accustomed to this trend and the Federal Reserve is unlikely to change its rates at the upcoming meeting.
The Brazilian government expects the central bank's benchmark interest rate to be cut by at least 50 basis points over the next three meetings, with the goal of ending 2023 with a rate below 12%.
The latest inflation report is expected to show a steady increase in consumer prices, with economists predicting a 3.6% overall inflation compared to last year, indicating that inflation is gradually coming down but still remains above the Federal Reserve's target.
The European Central Bank is expected to see inflation in the euro zone remain above 3% next year, which strengthens the case for an interest rate increase.
Inflation in the US is expected to accelerate again, with economists predicting a monthly rise of 3.6%, suggesting that price pressures within the economy remain a challenge in taming high inflation.
Argentina is facing skyrocketing inflation, with consumer prices soaring by 12.4 percent in August and an annual inflation rate of 124.4 percent, putting the ruling coalition on the defensive ahead of the upcoming presidential race.
Inflation in the US accelerated for the second consecutive month in August due to rising costs of rent and gasoline, with the consumer price index rising 0.6% from the previous month and 3.7% from the same time last year.
Wholesale inflation in the U.S. accelerates for the second month in a row, with the Producer Price Index rising to 1.6% and indicating that inflation is not yet in line with the Federal Reserve's target of 2%.
US wholesale inflation in August exceeded expectations with a 0.7% increase, driven by a surge in energy costs and gasoline prices, providing the Federal Reserve with new data to consider in its decision on interest rates.
The European Central Bank (ECB) has raised interest rates to a record high of 4% in an attempt to combat rising inflation, but suggests that this increase could be the last for the time being. The ECB expects inflation to fall in the coming years, but acknowledges that higher rates have impacted economic growth projections for the eurozone.
Nigeria's annual inflation rate reaches an 18-year high of 25.8% in August due to the removal of subsidies and rising prices, posing challenges for the country's largest economy.
The annual rate of inflation in the eurozone has been revised down to 5.2% for August, but it remains well above the European Central Bank's 2% objective despite a decrease in consumer prices.
The U.S. Federal Reserve kept interest rates steady but left room for potential rate hikes, as they see progress in fighting inflation and aim to bring it down to the target level of 2 percent; however, officials projected a higher growth rate of 2.1 percent for this year and suggested that core inflation will hit 3.7 percent this year before falling in 2024 and reaching the target range by 2026.
Japanese consumer inflation grew above expectations in August, potentially signaling a move away from negative interest rates as the Bank of Japan meets to discuss its monetary policy.