Ukraine invasion worsens central bank situation, says former central bank president

In an interview with CNNthis Thursday (24), former Central Bank (BC) president Gustavo Loyola commented on the consequences of the war in Ukraine for the global economy.

Loyola believes that the Russian invasion of Ukraine “aggravates the situation of central banks”. The former president of the BC explains that “the world was coming from an inflationary process, an offer that has not yet recovered from the crisis caused by Covid-19 and a very heated demand in several countries. Therefore, the dilemma of containing prices already existed, but it was exacerbated”.

For the economist, the United States and European countries should continue with the objective of containing inflation by raising interest rates, but now “with some additional caution”.

Regarding the sanctions that were adopted against Russia, Loyola believes that the measures should take time to take effect. “Russia prepared to attack Ukraine. The Russian central bank has accumulated reserves, raw materials and technology products, for example.”

However, the former BC president understands that, with the passage of time and the duration of the conflict, “companies will have difficulties to import and export products, investments should fall and Russians may face a lack of inputs. This all depends on the extent of the conflict and the degree of adhesion by other countries,” he said.

On the Brazilian situation, Loyola says that the country could be harmed in the short term. “The biggest impact will be on inflation, as international oil and gas prices should have an impact on Brazil, aggravating inflation.”

Finally, the former president of the BC says that world growth should be harmed “mainly with the rise in interest rates in several countries. A “disappointment” for several economies and growth expectations in the world.

Source: CNN Brasil

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