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From Staff Reports
Statistics released from Brazil show that the fifth-largest economy in the world grew by 5.7% in the third quarter, smashing forecasts from Reuters and Bloomberg polls – 4.7% and 4.9%, respectively.
Numbers surged across the board: Investments are up 14.4% from third quarter last year. Agriculture went up 7.2%, while Industry rose 5%. More than 200,000 jobs were added in October alone.
With such impressive growth, economists are hoping the Brazilian central bank keeps interest rates unchanged at 11.25% to combat inflation.
"For sure this higher-than-expected growth reinforces caution at the central bank," Jose Carlos de Faria, chief Brazil economist at Deutsche Bank in Sao Paulo, told Reuters. "Despite the fact that investments are growing strongly, demand is up at an unsustainable level."
It's easy to think that 11.25% is already high, but Brazil's central bank cut the benchmark rate 18 consecutive times – from 19.75% to 11.25% – from two years ago to September 2007. Last week, the bank voted to kept rates the same, but continued economic muscle like Brazil's could tempt the central bank to increase rates when it convenes again on Jan. 22 and 23.
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