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Brasil has announced intentions to reduce spending with a “strong fiscal move” to curb demand and cool inflation so that the central bank can lower interest rates.
Economist Nouriel Roubini believes the effort will backfire,luring more foreign capital as cuts reduce the budget deficit and bolster creditworthiness.
“I am not convinced by the argument,” Roubini said. “If you are fiscally sound, then you are even more appealing as a country and more money can come.” The real climbed to a 28-month high of 1.6435 per dollar last week but is now trading at 1.6889.
Brasil’s inflation-adjusted benchmark rate... 4.8 percent... is the second highest after Croatia.
