Reference no: EM133380145

Question: Read the scenario below and answer the questions posed in well composed, thoughttul paragraphs. Ensure that you integrate course material into your response and take time to edit your work for clarity. Brazil traditionally is considered to be the largest economy in Latin America. As a result the heath of the Brazilian economy is often used as a bell weather for the continent in general. Thus the actions of the Banco Central do Brasil (BCB - the country's central bank) are closely monitored in the financial press. The BCB has an inflation target of 6.25% percent for 2023 and 7% for 2024 & 2025. This inflation target has put the BCB at odds with the country's president who has publicly pushed for higher inflation targets. Last month the country's inflation rate was 3.77%, and the interest rate set by the BC was 13.75%. 1. What action do you think the BCB should take with regard to interest rates? Why is this the case? 2. Given that much of the price growth is due a strong Brazilian currency, what action could the BC8 take in the FX market to affect the value of the Brazilian Real? The Real currenty trades al