Central Bank signaled it will persevere in fighting inflation, says economist

The Monetary Policy Committee (Copom) of the Central Bank (BC) raised the Selic by 1 point on Wednesday (16), leaving the basic interest rate at 11.75% per year. in interview to CNN this Thursday (17), economist and professor at FGV Gesner Oliveira said that the BC gave an important message to combat inflation.

“The Central Bank has given an important message that it will persevere to break this inflationary spiral,” he said.

“Raising interest rates is an extremely bitter medicine, which hurts production a lot and limits the possibility of economic growth at a time when, unfortunately, the unemployment rate is still high. However, it has no other remedy from an inflation point of view,” she added.

The economist said that there is still uncertainty about how long interest rates will continue to rise in Brazil.

“Yesterday’s Copom communiqué predicts an increase of the same magnitude at the next meeting. But there is a lot of uncertainty about how long this rise will continue, especially in relation to the unfolding of the war between Russia and Ukraine and the international situation”, he declared.

Oliveira also highlighted that, despite the moment of low economic growth and the supply and demand problems that affect the whole world, he sees prospects for a better future for Brazil.

“Brazil has a very dynamic agribusiness, which this year should be fundamental to guarantee some growth, even if modest. In addition, we have some important opportunities in this difficult time of the world economy, especially in infrastructure and the green economy,” he said.

“These are huge opportunities that can turn this difficult situation into an avenue for growth. I would say that, in the medium term, if Brazil has planning, we will be able to grow more. We should rediscover a sustained growth trajectory of 3% or 4% to return to a thriving economy”, he added.

Text published by Fabricio Julião, from CNN Brasil Business