The Bovespa was rehearsed a nice smile, but the Fed’s threat to end its party. While US experts do not have a convergent view, there are indications that US interest rates will rise at the next May meeting. Everyone, for weeks now, from Janet Yellen to Patrick Harker, newcomer to the Fed, trying to convince investors that an alleged interest rate is already on the table.
Despite the FED executives insistence about the imminent increase in interest rates, many investors are still not convinced. The Brazilian newspaper “Folha de Sao Paulo” announces than yesterday, at an event in Chicago, Janet Yellen said that the country’s interest rate should rise again this month. “the steady rise in interest rates is still appropriate” and that an increase in March depends on the evolution of the US economy, she said.
“Let’s look at whether , employment and inflation data continue to evolve in line with our expectations,” she said. The Fed will make a decision after a meeting on days 14 and 15. Yellen’s speech has no direct relationship to Donald Trump, as the Fed is independent of the government. The rise in interest rates is a mechanism that keeps inflation from rising above what is desired.
With the economy heating, the consumption goes forward, which presses the index. Today, the US interest rate is between 0.5% and 0.75%. The expectation is to rise to between 0.75% and 1%. According to analysts, the market was already betting on this trend, and investors were not surprised. The dollar depreciated against a good part of the currencies and increased the fall in relation to the real: fell 1.20%, to R $ 3,115.
The Ibovespa, the main stock index, closed up 1.41%. If there is indeed a rise in US interest rates, investors tend to leave the emerging countries at greater risk to invest money in the US. With fewer dollars available, the price goes up. In Brazil, this scenario favors exporters and harms importers.