Brazil Situation Highlights Emerging Market Dilemma

“Brazil has gotten it wrong since the beginning of the Dilma cycle,” he said about the country’s recent interest rate hikes. “They put themselves in a situation that is the worst-case scenario for (emerging markets): stagflation—low growth and high inflation.”

Luis Oganes, global head of emerging markets research at JPMorgan Chase, also touched on the political situation ahead of presidential elections in October.

“Inflation is still a problem, and unfortunately in Brazil cutting rates won’t help growth,” Oganes said at the conference. “You need reforms … and ahead of an election no one is going to invest more in Brazil if they cut rates.”

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza