“While developed market economies are raising interest rates currently, Brazil is actually in an monetary policy easing cycle. A combination of declining inflation and slower-than-expected economic growth is leading policymakers to ease rates. In fact, over the last two years, Brazil’s key lending rate has declined by roughly 50%, from 14%, to now 6.75%. Low interest rates should continue to support equity market strength,” notes Seeking Alpha.
Brazil is undergoing massive reforms, including a 20-year constitutional spending cap tied to inflation, which has helped bring the economy out of a deep recession and strengthened investment confidence. The country now is working on passing pension reforms. Meanwhile, the Brazilian market is enjoying an acceleration in earnings growth.
“Specifically, Brazil’s economy is in a monetary easing cycle, with low inflation and rising employment. Brazil is similarly trading at much more depressed levels than many of its developed and developing market peers,” according to Seeking Alpha.
For more information on the Brazilian markets, visit our Brazil category.