Nobel laureates in economics say interest rates in Brazil are too high

Rio de Janeiro, March 3 (ZXS) -- On the 20th local time, Joseph Stiglitz, a well-known economist and Nobel laureate in economics, said in Rio de Janeiro that Brazil's interest rate level is shockingly high, causing the country's economy to struggle.

According to the Brazilian news website G1, Joseph Stiglitz made the above remarks when attending the seminar on "Sustainable Development Strategy for the 21st Century" held at the headquarters of the Brazilian National Bank for Economic and Social Development (BNDES) on the same day.

The Columbia University professor pointed out that Brazil's current key interest rate is 13.75% and the real interest rate is 8%, which has caused the country's economy to struggle. He also said that Brazil's high interest rates are one of the reasons for Brazil's poor economic performance for a long time.

Earlier, many people, including Brazilian President Lula, criticized the country's borrowing costs as hindering economic development.

Joseph Stiglitz believes that the rise in prices has more to do with the impact of the pandemic and the situation in Russia and Ukraine on the supply of goods than with the factor of overheated demand, which tends to be suppressed by rising interest rates. For him, this level of interest rates is enough to "strangle" economies like Brazil.

The media quoted Stiglitz's criticism as saying, "What is the root cause of inflation? The asymmetry of pandemics, war-related supplies, price adjustments, and these changes. The problem is that we need to respond to these shocks with more investment, and interest rates are holding back those investments."

"What Brazil needs is more investment, including more public investment," Stiglitz said. ”

Brazilian media El Paulo also reported that Geraldo Alckmin, Brazil's vice president and minister of development, industry, commerce and services, who attended the event, although also criticized the current level of interest rates, said that inflation will not return, and Brazil is undergoing tax reform, and the effect is expected.

Gerardo Alkmin said, "We face many challenges, including tax and funding costs, high interest rates. But Lula's government is working on tax reform. It simplifies five taxes into one, the VAT, which will stimulate exports and reduce costs for Brazilian businesses". (End)