South Africa surprised last week with it’s interest rate cut, bringing it’s prime rate down to 10%.
Inflation is at 5,7%, which is just a tad under the maximal treshold of the SA Reserve Bank; stressing the boldness of the move, especially if one knows to which extent Eskom electricity rates will go up in April (and continue to raise it’s prices beyond April).  But the newly appointed South African Bank Governor Gill Marcus had to put a populistic stamp to please president Zuma, who is increasingly turning to the left.

In Brazil meanwhile Reserve Bank President Henrique Meirelles announced he will stay in post, despite the October elections ahead; only this announcement made the real increase further in value.  Meirelles also announced that the focus of the reserve Bank will remain on inflation control; somewhat in contrast to South Africa.  Inflation is at 5,17% and the SELIC intrest rate is currently at 8,75%.

Against the dollar the Real looks to end 2010 at a stable rate compared to end 2009; against the Euro though…

Tags: brazilian real 2011

Strong October retail figures were posted yesterday in Brasil.

Supermarket sales in Brazil went up 7,3% compared to the year before.  The sales rise resulted largely from the further inclusion of social classed D and E.  This social progress of this enormous slice of the population underlines the growth potential ahead.

Unemployment dropped in October to an all-time low of 7,5%, while average income rose 3,2% year-on-year to R$ 1.350 (770 USD)

Brazil will clock of 2009 with a positive GDP growth and growth for 2010 is expected to be between 4 and 5%.

Also important: the consumer price index is running at a 12 month rate of 4,27% as of October, comfortably beow the government’s official goal of 4,5%.  With inflation under control, the central bank keeps its Selic base interest rate at 8,75%, the lowest rate ever.

The CEO of supermarket chain Pao de Acucar, Abilio Diniz, announced a profit of 206,7 million Brazilian Reais, up 210,3% from the same period last year.

Tags: brazil retail

Bloomberg reported last Friday that Brazil’s retail sales rose again more than expected. Retail sales went up 1,7% from the previous month, significant stronger than the 1,2% which was forecasted.

Most surprising was the increase in the sale of computer equipment which went up 15,6% compared to last year. If you take the broader index which includes automobile and construction materials, the index went up 10,2%. On a monthly basis, the broader index went up 6,5%, the biggest increase since its launch in 2007.

Good news is that the central bank remains cautious. Which is good; central banks which keep a strong eye on future inflation targeting have our preference.

Bloomberg reports that Brazil’s retail sales rose more than expected in May.  2008 was a record year in Brazil, yet retail sales rose 4% compared to May 2008 and it rose 0,8% compared to the previous month April 2009 (the expectation was a 0,4% increase).    The raising Brazilian middle class and Brazil’s huge internal market is fueling it’s resiliance in this crisis.

Economists are again revising Brazil’s GDP growth upwards.  This news will probably have the central bank incline to a further decrease of the SELIC intrest rate.  Estimates they will lower the rate from the current 9,25% to 8,75% on July 22.

Tags: middle class

For the first time in history, the Brazilian intrest rate is lower than 10%, the Banco Central lowered the rate to 9,25%.
Only since 2005 has the intrest rate slowly been decreasing towards 15% and below.

For the first time a whole generation of people will be able to finance the acquisition of a home.  Caixa Economica lowered this week the intrest rate to tariffs between 8,2 and 11,5% per year in the context of the Sistema Financiero de Habitacoa (SFH), which allows people to finance their proper home at a maximum sales price of 500.000 R$.  This is a decrease of 10,58% compared to the rates of April.

Also Banco do Brasil lowered it’s intrest rate for real estate financing last week from 8,0% to 8,4%.   They finance upto 80 to 90% of the sales value.  Banco do Brasil also lifted the finance period from 300 months (25 years) to 360 months (30 years).  The minimal financing amount has been highered to 150.000 R$ and the maximum amount is now 450.000 for loans in the SFH program (1,5 million R$ in case of a normal bond).

Also interesting is that Brasil is now financing 10 billion US$ to the IMF  (see article below).

Tags: brazil intrest rate, selic