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Opinion

Brazil’s belief in terraforming interest rates

Could lower interest rates give lift-off to Brazil’s economy? And how might they be achieved?

When talking to financial professionals in Brazil these days, the conversation often turns to the economy taking the next step in its progress and development. Brazil wants/expects/needs lower interest rates (the verb changes but the basic thrust is consistent) to kick-start a 10-year cycle of sustainable growth.

This faith in the terraforming effect of lowering the base interest rate from its present 10.75% is reminiscent, for connoisseurs of trashy science fiction films, of Total Recall. This 1990 film is set in a mining colony on planet Mars, the commodity being extracted from beneath the surface of the red planet in 2084 is turbinium ore, not iron ore, and there is nothing to suggest that the primary destination is China. A few plot twists aside, the hero (Arnold Schwarzenegger) manages to release oxygen into the Martian atmosphere, kick-starting virtuous oxygen, hydrogen and water cycles that create an earth-like environment able to sustain vegetative growth and human life.

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