Brazil's Fiscal and Financial Monetary Analysis

1192 Words3 Pages

The Brazilian central bank is called the Banco Central do Brasil (BACEN). The BACEN is in charge of monetary policy, protecting the stability of the buying power of the national currency, and the creditworthiness of the financial system. The central bank is the main monetary authority in Brazil and can function fully independently, unlike most countries central banks. Also the BACEN is responsible for both the national economy and the national currency. However, the government supervises the BACEN in order to check that nothing irregular is occurring.

Furthermore, the BACEN SELIC (Sistema Especial de Liquidacao e Custodia) rate is what is considered to be the Brazilian standard interest rate. The SELIC is an average of the interbank interest rates, which are charged for the trade in government securities with a development of 1 day. If the SELIC rate is increased or decreased it has an effect on the level of interest rates for banking commodities such as mortgages, savings and loans. This SELIC rate can be related to the FED’s Federal funds target rate.

Additionally, the level of inflation had been increasing over the past twelve month series recorded by the central bank. The BACEN is hoping to decrease the inflation level to 4.5% as seen in figure 5. This increase in inflation was partly due to the increase in market prices, which increased to 7.31% in November. The total inflation rate from between December 2012 to December 2013 shows a steady increase. It has only been in the last few months that the rate of inflation has been decreasing, but not by very much. During the same time, the market prices were recorded to be at the lowest rate of change seen in this series, which started in 1994. Meanwhile, inflation in the ser...

... middle of paper ...

... Year Low.” March 12, 2014. http://www.futurecurrencyforecast.com/us-dollar-to-euro-usdeur-exchange-rate-close-to-a-2-½-year-low/25251 Downloaded March 14, 2014.

Trading Economics, “Brazil Unemployment Rate.” Trading Economics. http://www.tradingeconomics.com/brazil/unemployment-rate Downloaded March 25, 2014.

Wikipedia, “Alliance- Sweden.” http://en.wikipedia.org/wiki/Alliance_(Sweden) Downloaded March 25, 2014.

Wikipedia. “Swedish Social Democratic Party.” http://en.wikipedia.org/wiki/Swedish_Social_Democratic_Party Downloaded March 25, 2014.

XE, “XE Currency Charts (EUR/USD).” http://www.xe.com/currencycharts/?from=EUR&to=USD&view=2Y Downloaded March 12, 2014.

XE, “EUR - Euro.” http://www.xe.com/currency/eur-euro#additionalinfo Downloaded March 25, 2014.

XE, “USD - US Dollar.” http://www.xe.com/currency/usd-us-dollar Downloaded March 25, 2014.

Open Document