Brazilian Government

This affects the competitiveness of the tradable sectors that are also affected by the increases in rates affecting your financial situation. High interest rates threaten to affect the growth of these economies. Given this context, the scope for monetary policy action, is reduced while inflationary pressures seem to be not wane. The latest data show that in Mexico there was an acceleration of inflation during the first half of March, where the increase in prices amounted to 0.48%, while underlying inflation a 0.33% did (more than double what was observed for the same period of 2007). In Brazil, while the market remains stable your expectation of inflation for 2008 around 4.4 per cent, the Brazilian Government has been concerned by the strong growth in credit to the private sector in recent months which may result in an increase of inflationary pressures before doubts about the supply response (in particular, of the automotive sectors, steel and construction operating at the limit of its capacity), cope with the growth in demand.

Against this background there is another alternative to the rise in rates policy? Meanwhile, some countries have prepared measures to attack inflation from costs. Such is the case of Colombia with the reduction of tariffs on imports of key inputs and Chile with the Elimination of taxes on fuels (although still not been reflected in a decline in the price of them). Although the situation has become more complex, the recent deceleration and reversal observed in the behavior of commodities prices promises to be a factor which plays in favour of soften inflationary pressures. You will have to wait to know if indeed confirmed this change in the trend of commodity prices, before the increasingly likely recession in the United States.UU. and their effects on the economy world, or if it was only a corrective movement.

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