INSTANT VIEW - Brazil reacts to U.S. Fed rates cut
Reuters, Thursday, October 15, 1998 at 16:22
SAO PAULO, Oct 15 (Reuters) - Following are comments from
Brazilian economists and market players after the U.S. Federal
Reserve cut the federal funds rate 25 basis points to 5.0
percent and the discount rate 25 basis points to 4.75 percent.
Brazil's benchmark stock index surged more than 5 percent
after the unexpected announcement on Thursday afternoon.
CARLOS KAWALL, CHIEF ECONOMIST AT CITIBANK IN BRAZIL:
"It's in the right direction.
"The risk aversion scenario still makes a 25 point cut not
enough to restore confidence. We need this to be supplemented
by internal measures."
JUSCELINO SILVIO FLORIDO, FUND MANAGER AT BANCO REAL:
"The market is showing a positive emotional reaction, but
in practice, the rates cut doesn't change much for Brazil.
"It isn't the kind of cut that is going to change investors
minds and make them take on the risk in emerging markets. It
has an effect, but not a very big one."
CARLOS GUZZO, CHIEF ECONOMIST, BANCO PONTUAL
"A cut in U.S. interest rates would help capital return to
Brazil quicker than expected, possibly by April next year,
because some pessimistic economists were not expecting capital
flight from Brazil to end for another year.
"But basically the lower rates in the United States would
only help. Brazil would need to show what it is planning to do
on its own to effectively clear the current crisis."
PAULO PEREIRA MIGUEL, CHIEF ECONOMIST BANCO BOAVISTA:
"For Brazil it's good because a calmer international market
gives the Brazilian government more time to prepare its
adjustment. It's not going to turn around the lack of liquidity
or reduction of funds for emerging markets, but it will give
the government more space to work in."
Copyright 1998, Reuters News Service |
