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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.

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International

China shows at the UN its “condemnation” of Israel for the “violation of Iran’s sovereignty”

The Chinese ambassador to the United Nations, Fu Cong, showed the “condemnation” of his country against the “violation of the sovereignty, security and territorial integrity of Iran” after the air attack launched by Israel against multiple targets in that country, the official newspaper Diario del Pueblo reports this Saturday.

That media echoes Fu’s speech to the UN Security Council on Friday, in which he demanded that Israel “immediately stop all its military actions.”

“China (…) opposes the expansion of conflicts, and is deeply concerned about the serious consequences that may arise from Israel’s actions. The intensification of regional tensions does not interest any of the parties involved,” said the Chinese emissary.

Beijing called on Tel Aviv and Tehran to “resolve their disputes through political and diplomatic means, and maintain peace and stability at the regional level jointly.”

In Fu’s view, the Israeli attack will have a “negative impact” on the negotiations on Iran’s nuclear program: “China has always been committed to the peaceful resolution of the Iranian nuclear issue through dialogue and consultations, and opposes the use of force, illegal unilateral sanctions and armed attacks on peaceful nuclear facilities.”

This Friday, China had already expressed its willingness to “play a constructive role” to curb the escalation of tensions and facilitate conciliation, in line with its traditional position of active neutrality in the region’s conflicts.

The Israeli attack, which according to Tehran caused dozens of deaths, including senior military commanders and at least six nuclear scientists, targeted key facilities such as the uranium enrichment plant in Natanz. Numerous civilian casualties were also reported.

Israel justified the offensive by claiming that the Iranian regime is secretly developing a program to manufacture nuclear weapons.

For his part, Iran’s supreme leader, Ali Khamenei, promised a “severe response” and assured that the attack would reveal the “evil nature” of Israel.

UN Secretary-General António Guterres also expressed concern about the bombing, at a time when Iran and the US The United States is holding talks about the Iranian nuclear program.

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International

Donald Trump’s government pauses its program of indiscriminate raides against migrants

The government of US President Donald Trump has decided to pause its campaign of discretionary roundings against migrants in certain areas due to its apparent concern about the growing unpopularity of these methods, according to The New York Times newspaper on Friday.

According to an email to which the newspaper has had access and the confirmation of US officials, the Executive has ordered the Immigration and Customs Control Service (ICE) to pause the beatings that affect the agricultural industry and the hospitality industry.

The spokeswoman for the Department of Homeland Security, Tricia McLaughlin, confirmed in a statement that “the president’s instructions” will be obeyed and the portfolio will also continue to “work to get the worst illegal foreign criminals out of the streets of the United States.”

The decision points out that this campaign of discretionary arrests to try to deport large-scale immigrants is harming industries and electoral constituencies whose support Trump wants to retain for next year’s legislative elections.

The new instructions were transmitted to ICE in an email sent last Thursday asking that “all investigations/law enforcement operations be suspended in work centers in the agricultural sector (including aquaculture and meat packing plants), restaurants and hotels.”

These new guidelines come in turn after more than a week of intense protests in Los Angeles against this immigration policy and that Trump himself admitted that the raids seem to be affecting the agricultural sector, which in states like California, where beatings have intensified, depend almost exclusively on immigrant labor.

Since his return to the White House in January, Trump has implemented an aggressive policy of hard hand against immigration and as a sample of his Cabinet officials recently held a meeting with the ICE leadership to order them to carry out 3,000 arrests a day, a mandate that seems to be behind the intensification of the raids.

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International

Trump says he knew “everything” about the attack on Iran and assures that the dialogue remains open

US President Donald Trump said on Friday that Washington “known everything” about the Israeli attack on Iran and that the dialogue on Tehran’s nuclear program “is not dead.”

“We knew everything and I tried to avoid Iran all this humiliation and death. I tried hard to avoid it because I would have loved to see an agreement,” Trump said in an interview with Reuters.

The US president insisted on what he wrote today about the attack on social networks, where he said he gave an ultimatum of 60 days to Tehran to reach an agreement.

“We knew practically everything. We knew enough to give Iran 60 days to reach an agreement and today it is already 61 days,” he explained in the interview, in which he said he did not know what the current situation of the Iranian nuclear program is after the attack launched by Israel, which also ended the lives of key military leaders of the Persian country.

Regarding the dialogue between the US and Iran about the nuclear program of the ayatollahs, Trump assured that “he is not dead”, that “an agreement is still possible” and also recalled that on Sunday a sixth round of dialogue is scheduled in Muscat (Oman) that they consider is now in the air.

“We have a meeting with them on Sunday. Now, I’m not sure if that meeting will take place, but we have a meeting with them on Sunday,” he said.

The United States and Iran have held five rounds of talks on the Iranian nuclear program since April, with Washington demanding that Tehran discard its capabilities both to manufacture an atomic bomb and to enrich uranium, something that the ayatollahs considered unacceptable.

Both Israel and Trump himself had warned of possible preventive attacks on the Persian country due to this refusal by Iran.

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