After raising fuel taxes, Haddad says he expects the Central Bank to reduce interest rates

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After announcing, this Tuesday (28), an increase in taxes on fuel, the Minister of Finance, Fernando Haddad, said he hoped that the measure would lead the Central Bank to reduce interest rates. Haddad referred to the economy’s basic interest rate, the Selic, which has been maintained at 13.75% per year by the Monetary Policy Committee (Copom), linked to the Central Bank. At a press conference, Haddad announced the return of federal taxes on gasoline and ethanol. Gasoline will be re-charged by R$0.47 and alcohol by R$0.02. According to the minister, the measures are beneficial for inflation in the medium and long term, which makes room for a drop in interest rates. Haddad said that the Copom itself recognizes this in its communiqués. Haddad also argued that the increase in fuel costs helps the government to meet the target for public accounts for the year, which is also a factor for falling interest rates, according to him. “Measures are focused on lowering interest rates in Brazil” , said Haddad. “We hope that Copom reacts as foreseen in the minutes of the Central Bank”, he added. The minister also stated that interest rates in Brazil are producing “harm for the economy”. “There is a credit problem, a problem on the horizon of economic growth, the country is united around this cause, which is the reduction of interest rates,” said Haddad.

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