High #Brazil services inflation hints at even higher interest rates, already at 13.25% http://t.co/LvUF83WAUb by @silviocascione
— MacroScope (@MacroScope) May 12, 2015
Looks can be deceiving. Get ready to strap yourself in.
High #Brazil services inflation hints at even higher interest rates, already at 13.25% http://t.co/LvUF83WAUb by @silviocascione
— MacroScope (@MacroScope) May 12, 2015
8 comments:
Is it sarcasm?
Explain.
Yes Mike things look like they are on fire down there with the 13%+ rates...
Huge fiscal flows there in the low teens on IRs.... similar to Russia although Russia has been bringing rates down a bit...
Services sector on fire... interest income thru the roof....
From article: "Services inflation remains worryingly high. It is running above 8 percent a year, so far shrugging off mounting job losses and rising interest rates."
Probably shedding jobs in oil or some other export area... domestic services look like they are booming out of control...
I keep thinking this is what is going to start to happen here if the Fed starts to raise...
lets say the Fed goes from 0.25% to 0.50%.... interest income immediately doubles... if they go to 0.75% it triples... and so on...
This is throwing gasoline on the fire...
Equities best place of refuge? Bonds will get killed imo... USD probably takes a hit...
These idiots will just keep raising once they start imo...
rsp,
Mike if you are correct and they start to raise in the face of lackluster economy, due to their beliefs that "rates are un-naturally low", (never mind that they are putting them there in the first place...) then they could really get things going spiraling out of control pretty quickly with raise after raise...
rsp,
According to a report published by Capital Economics, residential property prices in São Paulo have doubled within five years, while prices in Rio de Janeiro have tripled. Since then property prices have continued to climb with prices in São Paulo tripling since 2008, while prices in Rio have almost quadrupled.
Brazilian Real Estate Market Stable in 2015
http://www.propertyshowrooms.com/brazil/property/news/brazilian-real-estate-markets-stable-2015_313408.html
Essentially the same thing happened here the U.S. in the late 1970s despite the historically high cost of borrowing. It certainly busts the myth that raising rates discourages borrowing and in turn, as we see today, historically low interest rates do not necessarily encourage borrowing.
Naturally, as real estate prices go up the cost of real estate services increases. And, considering this from my own probably somewhat biased perspective, it seems real estate professionals themselves consume an unusually wide variety of services whether for business or personal hence inflation in the services sector could possibly be fueled by increased demand for services resulting from a healthy real estate market?
I dunno… what do you guys think?
Looks like get ready for a boom in mortgage lending if they start to raise here Jill....
Probably all the above .... raising the rates supports the domestic economy as interest income goes up. .. people start spending more for such services. ..
Rsp
Matt, Yes, that's what's always happened in the past. I wonder if that's how it would play out today. The (I'm guessing here) wealthiest employ large numbers of minimum wage workers. The wealthiest are the minority and so it seems to me that their potential to affect the cost of services to the point of inflation would be small.
As far as a lending boom being on the horizon, I do appreciate your encouraging sentiments =) bit, well..... Ho hum. 31 years it's just ebb and flow. That's all I hand to say about that.
resp,
And f or the record, I don't think we'll see a rate hike of any size this year. Hasn't Janet Yellen made it clear she's watching employment and incomes?
Yes Jill looks like it may be put off for the summer at least... maybe longer...
The Fed may be monetarist but we can see some pressure being put on them to raise anyway even in the face of lacklustre data.... the industry needs higher rates to make the kind of money they want to make... rsp
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