IMF praises Brazil’s monetary policy, but highlights ‘slow reduction in core inflation’

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Brazilian director at the IMF said that the country’s potential growth should continue to rise as a result of the reforms carried out and which are in progress, according to the Ministry of Finance. IMF logo outside the headquarters building in Washington Yuri Gripas/Reuters The Executive Board of the International Monetary Fund (IMF) said this Monday (31) that Brazil’s current monetary policy is “appropriate” and called for its continuation a future-oriented, data-driven approach. The board called for this approach given Brazil’s “slow easing of core inflation and inflation expectations still above target,” the IMF said in a report following the conclusion of a consultation with Brazil. The report also noted that headline inflation has retreated rapidly since peaking last year. Inflation accumulated in 12 months fell to 3.19% in mid-July, below the 3.25% target set by the Central Bank of Brazil. Fund directors praised an indirect tax reform proposal and plans to restructure direct taxes and streamline tax expenditures, the IMF added. Mobilizing additional revenues will help ensure Brazil’s fiscal sustainability and create space for priority spending, the Fund said. “Directors welcomed the authorities’ commitment to improving the fiscal position to maintain debt sustainability and support monetary policy disinflation efforts,” the report said. The Brazilian director at the IMF, Afonso Bevilaqua, said that the country’s potential growth should continue to rise as a result of the reforms carried out and which are ongoing, according to a statement from the Ministry of Finance. Bevilaqua also thanked the work of the IMF’s technical staff and reaffirmed that “domestic expectations are evolving favorably and that the new administration has worked to reconcile responsible macroeconomic management with social justice and environmental sustainability”, said the folder.

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