Brazil: An exciting kind of dull
Brazil’s stability is something bankers can’t help but get enthused about.
These are excitingly dull times in Brazil. The domestic uncertainty of a presidential election (albeit one that increasingly looks like Dilma Rousseff’s to lose) mixes with a faltering global economy to create, well, no discernible economic effect. Rousseff, leader of the left-of-centre Workers Party, recently said in an interview with TV Globo that any cuts to steadily increasing government expenditure would be "wrong" and that to defend spending cuts is a "crime". The real didn’t flinch on the international exchanges; capitalists and their capital took no fright or flight.
The international investment community views Rousseff’s likely (if opinion polls are to be believed) election victory with equanimity. In truth, there is little contention between the economic policies of the candidates. Whoever wins, the government will pursue the accepted trinity of economic policy: an independent bank setting interest rates to target inflation; a primary fiscal surplus; and a floating exchange rate.
Even controversy, where it is to be found among Brazil’s financiers, is telling. In July the president of Banco Central do Brasil, Henrique Meirelles, faced vociferous criticism following the bank’s decision to raise interest rates by 50 basis points – 25bp lower than had been widely expected.