International

Brazil hikes interest rate as inflation surges

AFP

Brazil’s central bank on Wednesday hiked its benchmark interest rate by a whopping 150 basis points for the second straight time, seeking to fight surging inflation even as Latin America’s biggest economy is stuck in recession.

The increase, the seventh straight, was in line with analysts’ expectations. It brought the Selic rate to 9.25 percent, the highest since mid-2017.

The decision was made unanimously by the nine members of the bank’s monetary policy committee, which said in a statement it expected “another adjustment of the same magnitude” when it ends its next meeting, on February 2.

“It is appropriate for the monetary tightening cycle to advance significantly into the territory of a contraction,” it said.

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“The committee will persevere in its strategy until not only the process of disinflation but the anchoring of (inflation) expectations in line with its targets are consolidated.”

Policymakers are navigating treacherous waters as they try to right Brazil’s listing pandemic recovery.

The South American giant’s economy is in recession, having contracted by 0.4 percent in the second quarter of 2021 and 0.1 percent in the third.

Despite the slump, the central bank has hawkishly slammed on the monetary policy brakes because of surging inflation, fueled by both global price pressures and Brazil’s own domestic problems.

The annual inflation rate came in at 10.67 percent in October, nearly triple the bank’s target of 3.75 percent.

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– Spending amendment –

Rapidly rising prices have been driven by a series of factors: internationally, those include global supply chain shortages, increasing oil prices and pandemic uncertainty.

At home, Brazil faces electricity rate hikes caused by droughts that sapped crucial hydroelectric dams, a weak currency and uncertainty around President Jair Bolsonaro’s bid to amend the constitution to free up money in the government’s tight budget for massive social spending.

Critics accuse the far-right president of embracing economic populism with the new spending measures.

But he won a victory Wednesday when Congress adopted a first portion of the spending amendment, enabling the government to postpone court-ordered debt payments.

That will free up 62 billion reais ($11 billion) to spend in 2022, with most expected to go to welfare payments.

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The economy has turned into a major headache for Bolsonaro heading into elections next October that polls currently place him on track to lose to leftist ex-president Luiz Inacio Lula da Silva.

Double-digit inflation has left many Brazilian families struggling to make ends meet, weighing down Bolsonaro’s already sagging popularity — and driving his bid for new social spending, political analysts say.

Brazil’s unemployment rate has meanwhile been stubbornly high, at 12.6 percent for the third quarter.

International

Erin brings strong winds and storm surge despite weakening offshore

Hurricane Erin weakened to a Category 2 storm on Tuesday but continues to pose a threat to parts of the U.S. East Coast with potentially dangerous flooding, according to meteorologists.

Although the hurricane’s eye is expected to remain offshore, experts are concerned about Erin’s size, as strong winds extend hundreds of kilometers beyond the storm’s center.

In its 18:00 GMT bulletin, the U.S. National Hurricane Center (NHC) lifted tropical storm warnings for the Bahamasand Turks and Caicos Islands, but kept them in effect for parts of North Carolina.

Erin was located several hundred kilometers southeast of North Carolina and was moving northwestward.

“This means there is a risk of potentially life-threatening flooding of 60 to 120 centimeters above ground level,” said NHC Director Michael Brennan.

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He also warned of the possibility of destructive waves, combined with storm surge, that could cause severe damage to beaches and coastal areas, making roads impassable.

International

Three U.S. Warships deploy near Venezuela to combat drug trafficking

Three U.S. naval vessels are moving toward the coasts of Venezuela, according to international media reports on Tuesday, after White House spokesperson Karoline Leavitt confirmed that President Donald Trump is ready to combat and curb international drug trafficking.

Reports indicate that the ships will reach Venezuelan waters within the next 36 hours as part of a recent U.S. deployment aimed at countering international narcotics operations.

The announcement coincides with Leavitt’s statement that Trump is prepared to “use the full extent of his power” to halt drug flows into the United States. The naval deployment involves approximately 4,000 military personnel.

“The President has been clear and consistent. He is ready to use every element of U.S. power to prevent drugs from flooding our country and to bring those responsible to justice. The Maduro regime is not the legitimate government of Venezuela—it is a narco-terror cartel,” the spokesperson said during a press conference.

International

Cuban authorities free salvadoran convicted in 1997 hotel bombing

Salvadoran national Otto René Rodríguez Llerena was released after serving a 30-year prison sentence for his involvement in a terrorist attack at a hotel in Cuba in 1997, the Cuban Ministry of Foreign Affairs reported.

During his trial, Rodríguez Llerena admitted to placing an explosive device at the Meliá Cohiba Hotel under the orders of anti-Castro exile leaders. He was arrested the following year when he returned to Havana with another load of explosives that failed to detonate.

“The Cuban government reiterates its commitment to combating terrorism, respecting human rights, and the need for the international community to hold accountable those who promote such acts,” the statement read.

He was released on August 15 and is the second Salvadoran to complete his sentence. In December of last year, another Salvadoran, Ernesto Cruz León, was released after planting bombs at tourist centers, one of which killed an Italian tourist identified as Fabio Di Celmo.

A third Salvadoran, Francisco Chávez Abarca, also received a 30-year sentence from Cuban courts in 2010 after being extradited from Venezuela through Interpol for actions against Cuba.

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Rodríguez Llerena had requested conditional release in 2016, arguing that his actions had not caused any direct fatalities, but no further information was released about his situation until now.