Turim’s Insights

In January’s edition of our monthly webinar, our experts look at the movements that have impacted global monetary policy over the past month. Since last year, central banks have been facing a cycle of high interest rates – but now with some divergences.

Our strategist Nelson Abrahao points out that the Euro Zone monetary authority has already communicated that it intends to maintain the pace of interest rate hikes at its next meeting, since inflation remains uncomfortably high and incompatible with the committee’s objectives. On the other hand, in England, the prospect is that this cycle will be interrupted more quickly.

In Brazil, in turn, even with activity and inflation surprising to the downside – which is consistent with a scenario of interest rate cuts – fiscal expansion and the noise between the monetary authority and the executive have raised concerns, especially with regard to compliance inflation targets in the coming years.

“The fiscal side worries the BC, as it is an injection of demand and increases the risk of inflation in the country. As a result, the monetary authority is prevented from cutting interest rates more strongly. The tax issue remains an Achilles heel in Brazil”, says Nelson.

The webinar also had the participation of Leonardo Martins Moraes, co-CEO of Turim; Henrique Santos, CFA portfolio manager; and Pedro Hokama, equity analyst.