Skip to comments.Brazil Did A Massive Rate Cut, And Suddenly The Whole World's Been Turned Upside Down
Posted on 04/18/2012 8:39:18 PM PDT by blam
Brazil Did A Massive Rate Cut, And Suddenly The Whole World's Been Turned Upside Down
April 18, 2012
The big monetary policy news of the evening: Brazil's central bank has cut interest rates from 9.75% to 9.00%. That was somewhat expected, but the real news according to Reuters is the dovish tone taken by the bank, implying more rate cuts to come.
Let's take a moment to pause and reflect on the state of global monetary policy.
The other big rate cutter is India, which did a 50 basis point cut earlier this week.
China is generally in an easing mood, though it's been a while since there's been a reserve requirement ratio cut.
So that's 3 of the 4 BRIC nations in easing mode.
On the other hand, today the Sweden's Riskbank held rates steady, surprising some. Then there was the Bank of England, which suddenly took a hawkish tone. And recent comments from the Bank of Canada was also hawkish. Also, the release of the March minutes from the Fed was hawkish, and of course the ECB seems to be in paralysis.
So the world's been turned upside down. The developing countries are casting aside inflation concerns to pump the gas pedal to revive flagging economies, while the world's aging developed nations are being relatively tightfisted, letting unemployment stay too high over fears of inflation.
2012 is a strange time.
(Excerpt) Read more at businessinsider.com ...
Symptomatic of the ongoing global currency war: A race to devalue and try to boost exports. Nobody wins. Savers lose big. Too-cheap credit spawns stupid investments and more overcapacity. BRICs beware.
But I've been through an inflationary period. It really, really sucks.
A race to the bottom. Where have we seen this before?
Yep, race to the bottom.
Lovely. Keep compressing; eventually they can join us in the ZIRP trap. It’s working sooo wonderfully here in the US.
Me, too and absolutely agree it sucked. OTOH, we learned then how to survive it and those lessons are now valuable.