Interestingly, while interest rates in the United States are pretty low and stable for borrowers, there are some other countries that are dealing with high interest rates. And, some of these countries are poverty stricken.

Protestors marched the streets of Brazil angrily. They were shouting slogans against the government while waving red flags. The protest was not about poor working conditions, corruption or human rights abuse. The crowds filled the streets of Sao Paolo clamoring about interest rates.

The main workers of Brazil’s union CUT are requesting the central bank to fight the growing poverty in the country by decreasing the high interest rate in their monetary policy.

A protest pamphlet states that only greedy bankers and speculators are benefiting from high interest rates. On the other hand, the workers are suffering from it. The pamphlet specifically states that the development of Brazil is more essential than the targets of inflation.

Unfortunately for CUT, policymakers do care about inflation and there is absolutely no chance of a reduction in rates this week.

But, CUT’s request for lower interest rates will remain unheeded. Policymakers are more concerned about inflation that there is no possibility that they will reduce rates in the coming days.

The twelve-month inflation rate of Brazil is almost close to the central bank’s 6.5 percent limit. This has alarmed the country that has been suffering from hyperinflation for many decades.

The question right now is if the central bank will increase their Selic rate. At the moment, it is at 11.75 percent over 25 or 50 basis points.

A Reuters survey that was conducted showed that economists have a consensus for a basis point hike of 50. It is time for the central bank to make a stand and prove to their skeptics that they can control the rise in prices.

But, the market shows the disagreement of the traders. The prices of interest rates futures, which oftentimes give exact forecasts than what economists provide, shows a 75 per cent possibility of an increase by 25 basis points.

Brazil is hesitant to increase the rates of interest further fearing that the presently overvalued local currency will continue to boost. The government has always used credit restrictions and capital measures to slow down the economy.

Some say that the central bank policymakers will increase the Selic by 25 points. They hope that their finance ministry colleagues will do the remaining work. Whatever actions will be taken, the protesters will remain unhappy.

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