Central Bank Policy Can’t Fix Brazil’s Economic Conundrum

Central bank policy alone will not be enough to generate sustainable economic growth in Brazil, as the government struggles to introduce fiscal discipline and structural reforms amid the country’s ongoing COVID-19 crisis. On May 5, the Banco Central do Brasil (BCB) raised its main policy interest rate, the Selic, by 75 basis points to 3.5% following a similar increase in April. The BCB signaled that another similar increase is likely in June, as it tries to get inflation and exchange rate depreciation under control. ...