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Higher interest rates and power rates

Rafael Herzberg's picture
Consultant energy affairs Self employed

Rafael Herzberg- is an independent energy consultant, self-employed (since 2018) based in São Paulo, Brazil* Focus on C level, VPs and upper managers associated to energy related info, analysis...

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  • Jan 12, 2021

Higher interest rates and power rates

Brazilian inflation forecast for 2021, especially for the first half, is on the rise.

Economists expect that the Central Bank will raise interest rates.

In this scenario, the amortization cost of investments, particularly capital-intensive ones, as is the case of the electricity sector, will suffer a significant increase.

In real life, regulated rates and in the same line, deregulated prices, will be directly impacted.

What will Brazil do? Will "force" the situation and keep rates as if nothing had happened or will recognize the new situation? Will populism or market realism prevail?

We are well aware of the results of the two alternatives. Which one will be chosen?


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