Brazil is the country with the highest real interest rate per year, discounting the inflation projection for the next 12 months, according to the ranking prepared by the portal MoneYou and the manager Infinity Asset Management. The list has 40 countries.
Until February of this year, the country was at the top of the ranking, but was overtaken by Russia in March, after the sharp increase in interest rates in the country amid the Ukrainian War. In May, when the Russian central bank cut the rate from 20% to 14% a year, Brazil returned to the top of the list.
This level of real interest is considered to be significantly contractionary for economic activity in Brazil, where the break-even rate is estimated at around 4.5%.
This Wednesday (21), the Central Bank’s Copom (Monetary Policy Committee) maintained the basic interest rate, the Selic, at 13.75% per year, which helps to consolidate Brazil’s position.
The expectation is that interest rates will only fall again in the second half of 2023, which should keep the country at the top of the ranking for the next few months.
To arrive at real interest rates, the one-year interbank deposit rate (DI) is considered, maturing in September 2023, and the inflation projected for the next 12 months (4.99%) in the BC Focus survey.
The second place in the ranking is Mexico (5.13% real interest per year), followed by Colombia (3.86%), Chile (3.38%), Indonesia (2.62%), Hungary (2, 13%) and Argentina (2.01%). There are 13 countries with positive real interest rates on the list and 27 with negative rates.
In the US, which raised its base rate this Wednesday to a ceiling of 3.25% a year, real interest is at -1.32% a year.
Argentines have the highest nominal interest in the ranking (75% per year). Brazil has the second largest, followed by Turkey (13%), Hungary (11.75%) and Chile (10.75%), which complete the double-digit base rate club.
“The global movement of monetary tightening policies continued to gain strength, with the expressive increase in the number of BCs signaling concern about inflation, even with the drop in commodity prices”, say those responsible for the survey.
In the ranking of 40 countries, 17.5% maintained their rates, while 77.5% raised interest rates and 5% cut them since the publication of the previous ranking, in August.
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