This article was last updated on April 16, 2022
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Brazilian share prices rose sharply in early trading Thursday, tracking gains on European markets following an unexpected interest rate cut by the European Central Bank.
The benchmark Ibovespa stocks index was up 1.84% at 58,375 points in early trading Thursday, according to Tullett Prebon via FactSet.
In a surprise move, the European Central Bank on Thursday cut its base interest rate a quarter of a percentage point to 1.25%.
The move came in the teeth of a crisis surrounding Greece’s sovereign debt.
In comments earlier this week, Greek Premier George Papandreou said he will ask parliament to call a referendum allowing Greek voters to decide whether to accept terms of a bailout deal, including stiff austerity measures, worked out last week with European Union leaders.
According to analysts, failure of Greek voters to endorse the deal could lead to a disorderly default on Greece’s sovereign debt, spelling heavy losses for regional banks and threatening the stability of the euro currency.
“The Greek premier’s decision showed awful timing and a complete lack of common sense,” said economist Jason Vieira of Sao Paulo’s Cruzeiro do Sul brokerage.
“The Greek decision makes no sense economically,” said Paulo Faria-Tavares, managing partner of Sao Paulo’s PTX Lending consultants. “But it makes perfect sense politically. Papandreou doesn’t live in France or Germany. He and his party colleagues live in Greece.”
Both Vieira and Faria-Tavares said the decision to hold a referendum was a clear effort to share political responsibility for Greece’s poor fiscal performance with the voters.
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