SAO PAULO (Reuters) – Discussions about interest rates in the United States and the presidential election in Brazil should set the economic and financial pace in the local scenario, with three more potential risks on the radar that should keep premiums and price volatility high. assets, according to the chief economist of the BV bank, Roberto Padovani.
“It’s clear that bond buying (in the US) will decrease, injecting less liquidity. The second step is to discuss the interest rate hike, and the second half will be dominated by (discussion of) interest rate hikes,” Padovani told reporters.
After confirming the reduction in purchases of bonds adopted to combat the effects of the pandemic, the Federal Reserve (Fed, US central bank) is now talking about accelerating this process – which suggests a faster drying up of liquidity in the country. The discussion that follows is about when interest rates will start to rise.
The electoral dynamics in Brazil will be marked, according to Padovani, by two characteristics – a competitive presidential dispute and debate on the economic agenda.
“The consequence of a scenario of change in global liquidity with an election in Brazil implies high risk premiums, and with a lot of volatility”, he warned.
But other risks have been added to these two. First, he highlights the Brazilian economic growth, with a scenario of weakness that causes concern – BV calculates an expansion of only 0.8% in 2022.
The fiscal sector also remains on the radar, given the pressure for higher public spending in an environment of high inflation and unemployment, increasing doubts about the trajectory of the public debt.
“The debt dynamics, which are open, further increase the uncertainty,” said Padovani.
Finally, the third alert element remains the pandemic, especially after the discovery of the new Ômicron variant.
“The concrete fact is that economies are closing, and this reinforces the feeling that the world can really grow. If the world grows less, we export less and also grow less, and political pressures increase”, he added.
(By Camila Moreira)
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