the worst moment of inflation in Brazil has already passed, said this Monday (27) the president of the Central Bank, Roberto Campos Neto highlighting that Brazil is very close to finishing all the work on raising interest rates to tame the rise in prices.
At the Lisbon Legal Forum, Campos Neto said that the tools of the central bank will slow down the inflationary process, repeating that much of the BC’s work has already been done.
“Brazil has a much greater memory of inflation and much more lively indexation mechanisms, which denotes a greater concern for Brazil. We see that all countries are moving forward, raising interest rates, Brazil is already very close to having done all the work, some countries are halfway there”, he said.
Two weeks ago, the Central Bank raised the Selic rate by 0.5 percentage point, to 13.25% per year, and said that he foresees a new adjustment, of equal or lesser magnitude, at the August meeting.
The monetary authority did not specify at the time whether this would be the last adjustment of the aggressive cycle of monetary tightening started in 2021.
Over the past few months, Campos Neto even made some predictions of when the country’s inflation would peak, but surprises in the indicators meant that the estimates were not confirmed.
This Monday, he indicated that this moment has passed, considering that it is necessary to evaluate measures under discussion in the Congress to hold the prices of fuels .
“The last two numbers [de inflação] I think they were for the first time within the expectation. We think that the worst moment of inflation in Brazil is over, we have some measures designed by the government that we need to understand what the effect will be on the inflationary process and it is still not clear”, he said.
In May, the IPCA slowed down and came lower than expected by the market, registering a high of 0.47%. O IPCA-15 Nonetheless, picked up again in June and stood at 0.69%, above expectations under the weight of the health plan readjustment, with the rate accumulated in 12 months remaining above 12%.
At the event, the BC president cited challenges for the global scenario for inflation noting that a growing number of countries are adopting protectionist measures as a way of dealing with rising food prices.
According to him, there is a disconnect in the areas of food and energy because investments in these sectors are not rising in the same proportion as the high prices of products.
Not to mention directly criticisms made by politicians of the company’s pricing policy. Petrobras Campos Neto said that the government has to deal with the problem of the lower social classes “but we cannot deviate from market practices” because, according to him, it is the market that produces energy and food.
Campos Neto stated that components such as energy and food contaminate inflation as a whole. Citing that there is a spread of the rise in these prices to the less volatile components of the economy in the world, he said that the BC acts “in another way” when inflation is more widespread.
Regarding the activity, he stated that Brazil is one of the few countries that is undergoing upward growth revisions. For him, the country will probably have a strong Gross Domestic Product result (GDP ) in the second quarter, considering that the BC’s performance will generate a deceleration in the second half.
Source: CNN Brasil
