Central Bank to do the “necessary” to keep inflation in check
Brazil’s Central Bank President Roberto Campos stated once again today (Aug. 12) that the financial institution will do “what is necessary” to keep in the inflation within the established range of targets.
“We will use every existing tool as they are needed, to have the inflation rates anchored in the medium and long runs,” Campos Neto said at the 33rd National Congress of the Brazilian Bars and Restaurants Association, Abrasel.
The message, he said, aims to reassure the market regarding Brazil’s capacity to preserve fiscal stability amid “successive shocks” that have been assailing the global economy.
“Brazil is an extremely indebted country. And there’s a perception of fiscal deterioration—an expectation on what Brazil is going to do to get back on the fiscal balance track. Any piece of news that may take economic agents to understand that there is fiscal destabilization has an effect on macro-economic variables, which makes an impact on the recovery of economic growth,” Neto declared. He also mentioned that, due to this context, interest rates have been on the rise in several countries, including Brazil.
On August 4, the Monetary Policy Committee (Copom) rose the Selic—the economy’s benchmark interest rate—from 4.25 to 5.25 percent a year in order to try and curb the rise of the inflation in the country, pulled by the food, fuel, and energy price hikes.
Nonetheless, the latest Focus readout, published by the Central Bank on August 9, indicates that the main financial institutions rose their estimated increase in the official inflation (as gauged by the National Broad Consumer Price Index, the IPCA) for this year from 6.79 to 6.88 percent. The report shows the bank’s weekly survey with forecasts from financial institutions for the main economic indicators.
The estimate surpasses the target set by the National Monetary Council (CMN), which stands at 3.75 percent, with a 1.5 percentage point margin—i. e. Between 2.25 and 5.25 percent. For 2022 and 2023, the target is 3.25 and three percent prespectively, with 1.5 tolerance points.
Vaccines
The president of the Central Bank acknowledged that, in macro-economic terms, Brazil continues to be impacted by the effects of the COVID-19 pandemic, but he underscored that the progress of the vaccination campaign among the population has increasingly helped resuming economic growth.
“When we compare the number of cases [of people recently infected with the novel coronavirus] with the number of deaths, [we see that] the vaccination is really effective and that it is the solution we imagined that would lead to the reopening of the economy,” he said.
