Battle Over Brazil Inflation Target Is Taking a Toll on Markets
- Rate expectations are higher since Lula began pushing for cuts
- Plan to raise inflation target may look like admitting defeat
Shoppers purchase produce at a market in the Madureira neighborhood of Rio de Janeiro, Brazil.
Photographer: Maria Magdalena Arrellaga/BloombergThis article is for subscribers only.
Investors are getting alarmed by the escalating fight over Brazil’s inflation targets — and they’re betting that the government’s drive for cheaper money will backfire.
Stock markets and the currency in Latin America’s biggest economy slumped Thursday after Bloomberg News reported that the administration of President Luiz Inacio Lula da Silva is pushing for an early review of the country’s inflation targets, with the intent of raising them.