The economy accelerated again and reignited concerns about the next steps of the world’s main economies.
Due to the escalation of tensions in the Middle East and the rise in oil prices, investors began to monitor possible interest rate increases in countries such as Japan and England.
“American inflation came in higher than the previous month and this is connected with the possibility of rising interest rates in Japan and England. In the USA, for now, this still does not seem like the main scenario, but more expensive oil already indicated higher inflation”, says Bernardo Pascowitch, presenter of Resenha do Dinheiro.
The advance in energy commodities occurs amid worsening geopolitical conflicts, increasing fuel costs and putting pressure on global production chains.
However, Marilia Fontes, founding partner of Nord Investimentos, notes that the case of Japan draws attention because the country has lived for decades with very low inflation and even periods of deflation.
“Japan suffered for many years with low inflation, and deflation is a serious problem for the economy. If consumers believe that prices will fall, they postpone purchases, consumption slows down and economic activity loses momentum”, explains Marilia.
After years of interest rates close to zero, the Central Bank of Japan began to normalize its rate. Now, the market is already considering new interest rate hikes in the face of global inflationary pressure.
For Thiago Godoy, financial educator, the current scenario could represent a structural change for companies developed economies.
“Inflation linked to energy is not something completely unexpected. We are talking about a global energy crisis that has been accumulating and could lead mature economies to live with higher inflation and interest rates for a prolonged and persistent period”, he says.
The possible rise in interest rates in Japan also threatens the carry trade, a strategy widely used by international investors. In other words, the investor took cheap money in Japan to invest in markets with high interest rates, like Brazil, for example.
With the Selic high, however, Bernardo considers that there are risks involved in this type of investment.
“If Japan raises interest rates, this operation loses its attractiveness. The investor has less advantage in this arbitration and many end up dismantling positions quickly to pay off the loans”, says Pascowitch.
When these operations begin to reverse, investors tend to sell liquid assets to reduce exposure and return borrowed capital.
Money Review
Carried out with the support of B3 and investment manager BlackRock, the program is presented by Marilia Fontes, founding partner of Nord Investimentos; Thiago Godoy, the “Finance Daddy”; Bernardo Pascowitch, founder and CEO of Yubb, proposes a light, direct and uncomplicated approach to topics related to financial education and investments. The attraction addresses the main economic topics every week with the informality of a conversation between friends — without compromising on analysis.
The Money Review airs every Friday, at 7pm, on the channel CNN Money on YouTube and on Sundays at 3pm on CNN Brazil.
