Lula’s push to boost spending in Brazil rattles markets
Associated PressRIO DE JANEIRO — On the campaign trail, Luiz Inácio Lula da Silva promised to sustain a massive welfare program, increase the minimum wage and boost health and education spending. Da Silva’s transition team on Wednesday night presented Congress with an outline of a proposal to skirt a constitutionally imposed spending cap by creating a carve-out for welfare. Traders have begun pricing in interest-rate hikes next year rather than cuts, as da Silva’s proposal “confirmed risk that before was just a rumor,” said Sérgio Vale, chief economist at MB Associados. The Senate’s president, Rodrigo Pacheco, who traveled to Egypt along with da Silva, has said he supports removing the welfare program from the spending cap. More than anything, Lula is very pragmatic.” Da Silva’s pick for vice president speaks to this approach: Geraldo Alckmin, a center-right former rival, was a three-term governor of Sao Paulo state, Brazil’s economic powerhouse.
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