Campos Neto warns of possible disruption in the markets and defends global fiscal effort – 10/10/2023 – Market

The president of the Central Bank, Roberto Campos Neto, defended this Tuesday (10) a coordinated action between countries in the fiscal aspect and warned of the risk of market disruption before the end of the global disinflation process.

The head of the institution also listed several pressures that affect the trajectory of inflation around the world and raised questions about how the challenging international scenario could impact emerging economies.

“The message is that governments need to start addressing the fiscal aspect. I think we are very coordinated in the monetary policy aspect, but we are not very coordinated in fiscal policy,” he said.

“If we are not able to address this in a way that people look ahead in terms of market prices and see that we will have equilibrium, at least in the medium term, we could have a disruption in the markets before we reach the [fim do] disinflation process”, he added.

Campos Neto participated in a panel on the state of the global economy and its implications for emerging market economies at the 2023 Global Meeting event, organized by the Emerging Markets Forum, in Marrakech, Morocco.

The BC president also gave a history of the challenges faced by countries since the outbreak of the Covid-19 pandemic to the most recent shocks, such as the impact on the price of oil amid the conflict between Israel and the Palestinian terrorist group Hamas.

In his speech, Campos Neto also highlighted the high cost of energy transition, greater uncertainty in the energy market due to geopolitical issues, in addition to the effects of climate change on food prices, citing the impact of rain on rice production in the South region. .

“From now on, where will disinflation come from? Oil will become more expensive, the green transition costs money, productivity is not increasing, I think it is decreasing,” he said.

“Can the disinflation process stop at higher levels globally? If true, what will happen? Will we live with high interest rates for longer? What will this mean for the emerging economy?”, he added.