Brazil’s tightening cycle not derailing credit growth

Brazil’s central bank has undertaken the most aggressive tightening cycle of any major economy over the past year, but there has been surprisingly little impact on bank lending. And while we do expect credit growth to weaken, we doubt that it will collapse. Perhaps the bigger risk from the sharp rise in interest rates is that the government’s fiscal challenge will become larger. EM Drop-In (17^th May): Do current EM debt strains point to a repeat of the kinds of crises seen in the 1980s and 1990s? Join our special briefing on EM sovereign debt risk on Tuesday. Register now.