According to Brazil’s finance leaders on Thursday, G20 finance ministers and governors of central banks are preparing for the possibility of a later beginning to U.S. interest rate cuts, which has led to global asset repricing and underscored the need for debt talks.
The shift in expectations following the United States higher-than-expected March inflation readings has tempered sentiment about several economic variables, including a global repricing of assets, according to Finance Minister Fernando Haddad, who made this statement at a press conference following a meeting of the Group of 20 finance leaders in Washington.
Haddad further pointed out that despite popular expectations that rate cuts in the greatest economy in the world will start in the first half of this year, the U.S. central bank’s communication could be more consistent.
In response to anticipation that the Federal Reserve could maintain high U.S. interest rates for an extended period, Campos Neto stated that caution and waiting were important.
He was asked if he had abandoned the forward guidance previously given of another 50 basis-point interest rate decrease at the Brazilian central bank’s next policy meeting in May. “Depending on the path (that unfolds), we will have a reaction function, I cannot anticipate what will happen,” he replied.
Haddad added that talks for possible restructuring and assistance to nations are more urgent because many G20 countries have debt in dollars that is impacted by fluctuations in US interest rates.
