17/03/2016 World Business Report

Those are the latest headlines from BBC World News.

Now for the latest financial news with Sally

Brazil's former president to become chief of staff,

The Fed scales back its plans for interest rate rises, as fears

Welcome to World Business Report, I'm Sally Bundock.

Also in the programme: Rico Hizon will talk us through

the market reaction in Asia to the news from the US central bank.

But first: We start in Brazil, where President Dilma Rousseff is

battling to save her government, amid a deepening political

On Wednesday she confirmed her predecessor,

former president Luiz Inacio Lula da Silva, will be returning to

Critics say it is just an attempt to shield him from corruption charges.

She says he is there to get the struggling economy back on track.

Top of the list of problems, a huge corruption scandal, involving

state-owned oil giant Petrobras, construction firms, and politicians.

President Rousseff is facing impeachment over the scandal.

But Brazil is also facing the worst economic crisis in a generation.

The economy shrank 3.8% last year, the biggest slump in a quarter

At the same time consumer prices are soaring,

Many Brazilian families are struggling with high levels of

household debt, and rising interest rates have piled on the pressure.

Former president Lula has been calling for more public spending

Foreign investors fear Brazil could now abandon its austerity measures.

News of Lula's return caused sharp falls in Brazil's currency

Daniel Gallas reports from Sao Paolo.

This is a former president Lula two weeks ago, hours after having been

detained for questioning as part of a probe into corruption. But now, in

a surprising turn of events, he is back in the heart of politics as a

Cabinet Minister. Usually when politicians are involved in

corruption investigations they are suspended or fired, not invited

government that these are very strange times in Brazilian politics.

Former president Lula remains a very influential politician, and right

now President Dilma Rousseff needs all the help that she can get as she

fights for her political survival. Time is running out for Dilma

Rousseff to react to a serious political crisis. She may be

suspended from office as early as May if she loses support from

Congress. They will decide whether to carry on with an impeachment

process against her. Dilma Rousseff is accused of allegedly doctoring

government accounts this year. Bringing in Lula to negotiate with

Congress is her last ditch effort to save her government. TRANSLATION:

This was an extreme measure taken by the government, which reveals how

alone it is incapable of establishing alliances in Congress.

But millions of Brazilians who went to the streets on Sunday in one of

the largest demonstrations in the country's history have very strong

views against Lula. They believe he has only accepted the job in Cabinet

in order to get job privileges in case he is charged with being

involved in the corruption scandal in state oil giant Petrobras. These

will be testing times for Dilma Rousseff if she is to reach the end

of her term. Jimena Blanco is principal analyst

for the Americas at How do you think this will play

out? Well, I think it is a very dangerous political strategy on the

part of the Dilma Rousseff administration. The government is

clearly trying to settle the coalition and ensure that they

remain within the coalition base. That is their main coalition ally.

The government's party, which is the party of the Vice President, have

had a very fraught relationship over the past year and over the weekend

they gave himself 30 days to decide whether they will stay in the

coalition or whether they will leave. The idea behind the

appointment of Lula as chief of staff is that he will be able to

ensure that the relationship with the party doesn't break down further

and that their base in Congress doesn't walk away from the coalition

and vote in favour of Dilma Rousseff's impeachment. However,

having said that, as Daniel pointed out, massive protests over the

weekend. Officially it was 3 million but many say it is far more than

that. Protests overnight as well. In terms of the short-term risk for

Rousseff, she has pretty... You know, incredible act to pull this

off, hasn't she? Given all the headwinds against them. Yes, our

view is if the appointment of Lula strengthens the anti-government

protests, which we saw over the weekend and last night, and they are

very much against Lula's involvement in government and very much in

favour of him facing potentially criminal charges in the Federal

Court 's, then there is a significant risk that the party will

decide in 30 days' time that enough is enough, it is time to move on and

prepare ourselves for 2018 and see whether we can go it alone. 2018 is

the general election, but there are 48 politicians across parties all

being investigated. It is not just Rousseff herself as an individual,

Lula and a few around her, it is actually 48 all editions. Yes, and

they come from numerous parties within the ruling coalition and the

opposition. So the investigation of the case could actually remove a lot

of potential presidential hopefuls from the race in 2018, and the

electorate may not have a very clear choice. Thank you for coming in, and

of course we will keep an eye on that story very closely.

America's central bank left interest rates unchanged on Wednesday,

amid growing uncertainty about the global economy.

It said it was on track to raise the cost of borrowing again this year.

But it has scaled back the pace of planned rate rises,

When in doubt, wait. That seems to be the thinking, at least, of the US

Federal reserve as it left its key interest rate unchanged. Officials

also pencilled in just two rate hikes this year instead of the four

assumed back in December, essentially leaving rates are lower

for longer. The bank's chair Janet Yellen made it clear the main reason

for the Fed's change was concerned about slower global growth. You have

seen a shift this time in most disciplines' assessments of the

appropriate path for policy -- most participants' assessments. That

largely reflects a somewhat slower projected path for global growth,

for growth in the global economy, outside the United States. Like the

Bank of England and the European Central Bank, the Fed is worried

about lower global growth so while it is becoming easier for Americans

to find a job and despite signs of inflation is modest, politicians

want to proceed cautiously to allow the US economy more time to recover.

Investors seemed pleased with this more gradual approach, the S 500

closing at its highest for the year. Markets are on the rise in Asia

after that news from the Fed. Rico Hizon is tracking

developments for us in Singapore. Nice to see you. How is it going

that? A lot of these risky assets are rising in Asia. Stocks in

emerging market currencies, an oil all in positive territory. Traders

say that the Fed's newsstands is relatively friendly. The potential

for more money to continue flowing into commodities and equities rather

than being lowered by higher US interest rates is boosting crude oil

and emerging market stock. -- new stance. You are seeing the negate

two to five, -- Nikkei 225, and other Asian stocks in positive

territory in this hour. Other analysts say that removing the

interest rate risk in the near term is enough to lure money back into

risky assets but price increases in the likes of gold and the

depreciation of the US dollar and the game of the Japanese yen which

are safe haven assets, would indicate there is still a a degree

of risk in the marketplace. Other currencies firming up today. Thank

you very much for keeping us up to date.

In other news: The Bank of England is expected to leave interest rates

unchanged at 0.5% when it meets to set policy later.

A cargo ship carrying millions of pounds worth of luxury cars lost

control and ended up on a sandbank in the Solent, because