Fall in core inflation is slow, says Campos Neto – 05/06/2023 – Market

The president of the Central Bank, Roberto Campos Neto, said this Monday (5) that inflation is improving, but still slowly, especially in the case of cores, which measures less volatile prices and he highlighted that they have fallen “quite slowly “.

Core inflation is a measure that seeks to capture the price trend excluding disturbances resulting from temporary shocks such as droughts.

“We need to insist”, said Campos Neto in a seminar to cooperatives in the city of Guaxupé (MG). He also stated that long-term inflation expectations are high.

“For the first time in history, Brazil has an average inflation much lower than that of the developed world,” he said. “The BC’s autonomy proved to be efficient. The BC’s main objective is to keep inflation on target.”

During his presentation, Campos Neto pondered that in a large part of the world “full” inflation is falling, as well as energy inflation. At the same time, he described the fall in core inflation as “quite slow” – something he has been punctuating in recent speeches when assessing the Brazilian situation.

Campos Neto also said that Brazil was one of the first countries to raise its interest rate during the pandemic, to combat inflation.

“In this process of fighting inflation, the faster you do it, the better”, he said, when addressing the social cost of high interest rates. “Perception, timing and efficiency are super important,” he added.

At the end of his presentation, Campos Neto addressed inflation again and mentioned the criticism that the Central Bank has been receiving for maintaining the basic Selic rate at 13.75% per annum.

“The BC raised interest rates to combat inflation, but the BC is not just interest. If it weren’t for the BC, we wouldn’t have the PIX”, said Campos Neto, citing other actions developed by the autarchy, such as those aimed at credit unions .

“Sometimes, we feel sorry to see so much criticism of the BC, which is a technical body that makes important deliveries to society”, he added.

Campos Neto’s comments come at a time when the BC continues to be criticized by members of the Lula government for keeping the Selic rate at high levels. The government’s argument is that there would already be room for the institution to start the cycle of Selic cuts.

CREDIT

In his speech this Monday, Campos Neto also addressed the current credit scenario in the country. According to him, after growing close to 13.5% a year, credit should expand between 7% and 8% in 2023.

“The credit slowdown in Brazil has been to some extent moderate”, he evaluated. “We had an improvement in the cost of credit, but it is a small improvement. We have a lot to improve”, she said at another time.

Addressing economic growth, he assessed that the service sector is “quite strong” in Brazil, while the industry “has been moving sideways, with the automotive industry in decline”.

This Monday Campos Neto visited the Regional Cooperative of Coffee Growers in Guaxupé (Cooxupé), in Guaxupé, in the interior of Minas Gerais.