Frederick Searby, who is a Latin America strategist at Deutsche Bank AG, discussed Brazil’s stock market, economy and monetary policy with Lisa Murphy on Bloomberg Television’s "In the Loop." He says that Brazil has the opposite problem of the developed economies in that it is dealing with overheating and inflation while the developed economies have a serious deflationary undertow.
His view is that liquidity has dried up somewhat due to ‘political risk’ – Petrobras last year and the capital controls in the ongoing currency war this year being notable examples. That is a negative overhang for markets in Brazil. However, if there is a crisis like in 2008, Brazil can cut rates and probably will start doing so. That gives it more policy space than we see in the US where rates are zero percent.
Video below