Brazil to flood economy with money in case of depression as rate cut shows response

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Brazil to flood economy with money in case of depression as rate cut shows response

On Saturday, the 9th of May 2020, Paulo Guedes, the Economy Minister of Brazil, said in a statement that the free-market economy of Brazil, ranked as the world’s 9th largest by nominal GDP (Gross Domestic Product) and the 8th by PPP (Purchasing Power Parity), would be showered with fresh fiscal stimulus in case of a depression due to the pandemic outbreak.

In point of fact, Guedes’s Saturday’s (May 9th) remarks came forth as the country appears to be leaning more on to a lower interest rate in order to see through the financial fallouts of the pandemic, since the Brazil’s Central Bank had slashed its benchmark interest rate by 75 basis percentage point to 3.00 per cent last week to insulate its economy from the consequential repercussions of the pandemic outbreak, a move which Guedes had touted on Saturday (May 9th) as an economic bellwether that had enabled tens of thousands of companies to trim pay offs and working ours, therefore saving 6 million jobs thus far.

Apart from that, Guedes’s latest comment was brought in to light a couple of days after the Brazilian Congress had unanimously voted to approve a constitutional amendment which would provide the Central Bank with additional authoritative powers to purchase public and private sector assets in case of a fiscal indentation of a greater scale.

Meanwhile, adding that the country’s Central Bank would proffer sufficient liquidities to battle past the pandemic for small- and medium-scale businesses, Guedes said on Saturday (May 9th), “We are going to shower all the economy in case of a depression, if there is infinite demand for liquidity.