Why even Carnival junkies should care about interest rates


This story is about inflation, but bikinis are mentioned. So here you go.



Brazil’s Central Bank has boosted its benchmark Selic interest rate to 11.75 percent and – wait! wait! don’t stop reading – this matters even if you only care about Brazil because of Carnival, beaches, or barely-dressed Brazilians. Here’s why:

The government is raising interest rates in a bid to keep inflation in check, as prices have shot up about 6 percent in the last year. That means pricier cold beer, beach chairs, barbecue and bikinis, for Brazilians and visitors alike. But the bummer for foreigners is that, even if the interest rates quell inflation, all those lovely things will still be expensive as hell. Higher interest rates tend to attract foreign investors looking for high returns. And that influx tends to make the currency more expensive. Thus you’ll get fewer reals for your dollar, euro, etc, and your sub-equatorial party will be that much less fun. Obviously, it should be said that the stakes are far higher for Brazilians. Inflation means food, housing, education—life—is more expensive. And an overvalued currency hurts industry because their exports cost more, and are therefore less competitive. But you’ve probably stopped reading by now anyway. To reward those still here, enjoy some more Brazilian hottie pictures, dudes this time.