Brazil’s Economic Activity Index Shows Positive Variation

Brazil’s Economic Activity Index (IBC-Br), believed to be an omen of the country’s Gross Domestic Product (GDP) rose 1.70% in February 2021, against January’s figures. a positive variation of 0.98% year to year, against the -0.4% analysts had envisioned. The official forecast of the Central Bank on GDP expansion for 2021 is 3.6%. The projected inflation for this year remained unchanged at 4.9%, still above the central bank’s target of 3.75%, which is also the case for the 2022 projections, as the weekly Focus report set it at 3.6% against the Central Bank’s goal of 3.5%. Favoured raising interest rates aggressively at the beginning of a cycle of monetary tightening, to avoid raising rates too much at the end of the curve and keeping interest rates contained.

There is always the risk that short-term inflation will begin to contaminate the final leg of the curve and that is why there was a move (raise the rate) earlier than the market expected. The faster the act, the more efficient we shall be. The country’s leading Sao Paulo stock exchange closed on a downward path which could have been deeper had it not been for the appointment of Petrobras’ new CEO, who seems to have injected some confidence into the company’s image, climbing 6%. Brazil’s currency, the Real, went up 0.57% against the US dollar, closing at 1 US$ = 5.5538 R$.

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