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

UK braces for potential CO₂ shortage amid Middle East tensions

The government of United Kingdom is preparing contingency measures amid fears of a potential shortage of carbon dioxide (CO₂), which could impact the agri-food industry if the Strait of Hormuz remains blocked due to the ongoing conflict in the Middle East, The Times reported on Thursday.

According to the newspaper, officials assessed this scenario during a recent crisis meeting aimed at evaluating the consequences of a prolonged conflict, triggered on February 28 by joint attacks from United States and Israel against Iran.

Under this scenario, CO₂ supplies—primarily a byproduct of fertilizer production using natural gas—could fall by up to 18%, affecting multiple sectors including agriculture and food production.

The gas is widely used in the slaughter of pigs and poultry, as well as in extending the shelf life of packaged foods. Breweries could also face disruptions due to reduced availability.

“I don’t want to comment on a leak, but now that the information is out there, I hope people feel reassured knowing we are working on it,” said Peter Kyle, Secretary of State for Business and Trade, in remarks to Sky News.

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While a drop in CO₂ supply is not expected to cause major shortages in supermarkets, it could limit product variety, The Times noted, citing access to internal government documents.

To mitigate the impact, authorities are considering prioritizing CO₂ supply for critical sectors such as healthcare and civil nuclear energy, where it is used in cooling systems for blood reserves, organs, vaccines, and electricity generation. The government may also request domestic producers to increase output.

Central America

El Salvador and Paraguay approve 2026–2028 cooperation program

The governments of El Salvador and Paraguay approved the 2026–2028 Cooperation Program, which includes six joint development projects, according to Salvadoran Vice Minister of Foreign Affairs Adriana Mira.

Mira stated that El Salvador will act as the “main provider of cooperation,” contributing five initiatives focused on road infrastructure, tourism, and local development. She also noted that one of the projects will be led by the Paraguayan side, although no further details were disclosed.

The agreement was reached during the Second Meeting of the Joint Commission on Technical and Scientific Cooperation between both countries.

According to Paraguay’s Ministry of Foreign Affairs, the First Meeting of the Political Consultation and Bilateral Coordination Mechanism was also held, with the participation of Vice Minister Víctor Verdún.

In an official statement, the Paraguayan government reported that both delegations agreed to identify mechanisms to promote competitiveness, economic growth, and market access. They also committed to signing agreements related to air transport cooperation.

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International

Macron meets Machado, stresses need for democratic transition in Venezuela

Emmanuel Macron met on Monday at the Élysée Palace with Venezuelan opposition leader María Corina Machado, where they discussed the importance of advancing a democratic transition in Venezuela.

In a message shared on social media, Macron highlighted Machado’s commitment to freedom and stressed the need to achieve a transition that is peaceful and respects the will of the Venezuelan people.

“I received María Corina Machado, Nobel Peace Prize laureate. Together, we discussed her commitment to freedom and the importance of achieving a democratic, peaceful transition in Venezuela that respects the will of its people,” he wrote.

For her part, Machado expressed her “deep gratitude” to Macron and to France for their support of democracy and freedom in Venezuela.

“We have gone through a long and painful journey, and we are now very close to freedom. Venezuela will become a nation of free and equal men and women—prosperous, safe, and united,” she said.