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Montevideo, March 29th 2024 - 09:57 UTC

 

 

Brazil determined to lower inflation; Central bank could raise Selic rate at next meeting

Saturday, April 13th 2013 - 05:36 UTC
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Tombini and Mantega made the statements at different events but on the same day Tombini and Mantega made the statements at different events but on the same day

Brazil's top two economic policymakers warned on Friday that high inflation will not be tolerated. Central bank chief Alexandre Tombini and Finance Minister Guido Mantega said at separate events the government will not hesitate in taking measures to combat high inflation.

Mantega went further and specifically stated that interest rates could move up. Next Wednesday the Central bank’s monetary commission meets to decide on interest rates.

Both officials, sometimes considered to be at odds over how to tackle inflation, shared the same tough language against a surge in prices that threatens the sluggish economy and President Dilma Rousseff's re-election prospects next year.

“There is and there will be no tolerance of inflation. We are closely monitoring all indicators at this moment and will make decisions in the future about the best course for monetary policy,” Tombini told reporters in Rio de Janeiro when asked about market expectations there would be a rate increase next week.

His comments were rare because the bank's board members are usually silent before making monetary policy decisions.

Some analysts noted that, for the first time in a long time, Tombini said he was “closely” monitoring all indicators to decide the next steps, which could be a hint an interest rate rise was imminent.

The central bank is under growing pressure to raise rates from the current record lows of 7.25% after inflation broke through the top end of the official target in March and curbed consumer spending in February.

Earlier in the day, Mantega told a group of businessmen the central bank could raise interest rates if need be and that there was no political agenda to block such a move.

“We will not hesitate to take measures, even measures that are considered less popular, like for example those related to interest rates,” he said.
 

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