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.
“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.
– 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.
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
Brazil’s Lula wishes Trump a successful term focused on prosperity and peace
Brazilian President Luiz Inácio Lula da Silva wished the new U.S. President, Donald Trump, a “successful” term that promotes “prosperity and well-being for the U.S. people” and “a fairer and more peaceful world.”
“On behalf of the Brazilian government, I congratulate President Donald Trump on his inauguration,” said the progressive leader on his social media, shortly after Trump took the oath of office at the Capitol in Washington.
Lula, 79, highlighted that the relationship between Brazil and the United States, one of its most important trade partners, is “marked by a history of cooperation, based on mutual respect and historical friendship.”
“Our countries maintain strong ties in various areas such as trade, science, education, and culture. I am confident that we can continue to make progress in these and other areas,” he added.
International
Iran hopes U.S. will adopt realistic approaches under Trump administration
Iran declared on Monday that it hopes the new U.S. administration under Donald Trump will adopt “realistic approaches” toward Tehran and show “respect” for the interests of the countries in the region.
The Republican tycoon will take the oath for his second term as president of the United States on Monday at noon Washington time (17:00 GMT).
“We hope that the approaches and policies of the new U.S. government will be realistic and based on respect for the interests… of the countries in the region, including the Iranian nation,” said the spokesperson for the Ministry of Foreign Affairs, Esmaeil Baqaei, during a weekly press briefing.
During his first term (2017-2021), Trump implemented a “maximum pressure” policy toward Iran.
In 2018, under his administration, the United States withdrew from the international nuclear deal with Iran, concluded three years earlier, which offered Tehran relief from sanctions in exchange for assurances that the country would not seek to acquire nuclear weapons. Tehran denies any such intentions.
In response, Tehran significantly increased its stockpile of enriched materials and raised the enrichment threshold to 60%, approaching the 90% required to produce an atomic bomb, according to the International Atomic Energy Agency (IAEA).
Tehran, which has expressed a desire to relaunch negotiations to revive the deal, defends its right to nuclear energy for peaceful purposes and denies any intention to develop nuclear weapons.
International
Trump to sign executive order recognizing only two sexes
Donald Trump will sign an executive order instructing his administration to “recognize” the existence of only “two sexes,” future White House officials announced on Monday, just before the Republican’s inauguration.
“What we are doing today is defining that the policy of the United States is to recognize two sexes: male and female,” said the official, speaking to the press on the condition of anonymity.
The aim of the decree is “to defend women against the ideological extremism of gender and to restore biological truth within the Federal Government,” the official added, explaining that a person’s sexual identity will be defined solely by the gametes they possess.
During his campaign, Trump repeatedly promised to put an end to the “transgender delusion.”
The elected president also plans to eliminate federal funding for programs supporting diversity in the administration, the same officials from his incoming cabinet stated.
“We are going to end this type of funding, we are going to put an end to these programs,” said one source from the future team, speaking anonymously about antiracism and diversity training courses.
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