Core Viewpoint - The Brazilian Central Bank's recent decision to raise the benchmark interest rate to 15% has raised concerns among economists about the sustainability of federal debt and the need for effective fiscal reforms to alleviate pressure on public finances [1][2]. Group 1: Interest Rate Impact - The Central Bank's monetary policy committee unanimously approved a 25 basis point increase in the benchmark interest rate, marking a new high and raising market concerns about debt sustainability [1]. - Approximately 47% of federal public debt is linked to floating rate bonds, with a total stock of 3.75 trillion Brazilian Reais. A 1% increase in interest rates will raise debt costs by 37.5 billion Reais within a year [1]. - The recent 0.25 percentage point increase is estimated to lead to an additional expenditure of about 12.1 billion Reais over the next 12 months [2]. Group 2: Debt Projections - The total federal debt could approach the set limit of 8.5 trillion Reais by the end of 2025, up from 7.3 trillion Reais at the end of 2024, due to rising financing needs and increased borrowing costs [2]. - Interest payments on federal domestic currency debt are projected to reach 540.43 billion Reais over the next 12 months at current interest rates [2]. Group 3: Fiscal Policy Concerns - Economists express that the tightening of monetary policy reflects market concerns over the ongoing expansion of fiscal policy, which exacerbates inflationary pressures [2][3]. - The reliance on debt to pay interest has created a vicious cycle, with warnings that without achieving a basic fiscal surplus, total debt will continue to rise [3]. - The urgency for coordination between fiscal and monetary policies is increasingly evident as Brazil faces the dual challenges of high interest rates and high debt levels [3].

Group 1: Economic Insights - The Governor of the Bank of Japan, Kazuo Ueda, warned that the ongoing rise in food prices could become an "invisible bomb" for increasing Japan's core inflation [1] - Japan's core inflation rate is nearing the central bank's target of 2%, with food inflation, particularly rice prices, surging by 90% year-on-year, disrupting traditional inflation drivers [1] - Ueda emphasized that while the central bank maintains the view that the impact of rising food prices will gradually diminish, any minor fluctuations could trigger a chain reaction due to the current proximity to the 2% threshold [1] Group 2: Gold Market Analysis - Despite a recent pullback, gold prices are expected to trend upward due to geopolitical risks, tariff policies, and concerns over the U.S. budget, with Citigroup raising its 0-3 month target price to $3,500 per ounce [2] - UBS also maintains a bullish stance, anticipating that gold will test the $3,500 mark again [2] - The market remains above $3,310, with strong safe-haven demand, suggesting traders should maintain a bullish outlook and watch for entry points driven by news headlines [2] Group 3: Gold Price Movements - On May 27, international gold prices exhibited volatility, opening at $3,343.63 per ounce, reaching a high of $3,349.78 and a low of $3,331.41, closing at $3,344.63 with a slight increase of 0.06% [3]

Core Viewpoint - The President of the Central Bank of Brazil indicates that inflation expectations in Brazil have long been unanchored [1] Group 1 - The statement highlights concerns regarding the persistent inflation expectations in Brazil [1]

Core Viewpoint - The European Central Bank Executive Board member Schnabel indicated that supply-side shocks may persist and could threaten the anchoring of inflation expectations, emphasizing the need for readiness to respond swiftly [1] Group 1 - Supply-side shocks are likely to continue affecting the economy [1] - There is a potential risk that inflation expectations could become unanchored due to these shocks [1] - The necessity for prompt responses to economic changes is highlighted [1]