Without high interest rates in an election year, Brazil could have inflation of 10% in 2022 and interest rates of 18.75% this year, says BC president

[ad_1]

The president of the Central Bank, Roberto Campos Neto, said this Tuesday (25th) that he acts technically in setting the basic interest rate to combat inflation. During a public hearing at the Economic Affairs Commission (CAE) in the Federal Senate, he recalled that the basic interest rate, currently at 13.75% per year, the highest level in six years, advanced last year, during the election period. “Never in the history of this country, nor in the history of the world, has there been an increase in interest rates in an election period. Which shows that the Central Bank understood that inflation was going to rise, before most other countries. country was one of the first to raise interest rates”, declared Campos Neto. The autonomous BC is commanded by Campos Neto, appointed by former President Jair Bolsonaro (PL). According to him, if the Central Bank had stopped raising interest rates last year, during the elections, inflation would have been 10% in 2022, and not 5.8%. “And today, to control inflation and expectations for next year, we would have to have interest rates of 18.75% [ao ano]. If we didn’t, inflation would contaminate and go up a lot. The BC acted autonomously”, added the president of the BC. The level of Brazilian interest rates has been repeatedly criticized by President Luiz Inácio Lula da Silva and members of the government, for slowing down the economy and negatively influencing the generation of jobs. are defined To define the interest level, the Central Bank uses the inflation targeting system as a basis. When inflation is high, the BC raises the Selic rate. When inflation estimates are in line with the targets, the Central Bank can reduce the economy’s basic interest rate. At this moment, the BC is already adjusting the Selic rate to try to reach the inflation target for next year, since decisions on interest rates take from six to 18 months to have a full impact on the economy. next year’s inflation target is 3% and will be considered met if it fluctuates between 1.5% and 4.5% In the minutes of the last Copom meeting, when interest rates were kept stable at 13.75% per year, the highest level in more than six years, the Central Bank assessed that consumer inflation remains high. In twelve months through February, official inflation reached 5.60%, still above targets. The major contributor to last month’s IPCA result was the Education group. For the Copom, the current slowdown in economic activity “is necessary to ensure the convergence of inflation to its targets, particularly after a prolonged period of above-target inflation”. This occurs, in the view of the Central Bank, because there is currently “an inflationary dynamic driven by excess demand, initially in goods and which has now shifted to the services sector”. The Copom also informed that the process of reducing inflation “demands serenity and patience in conducting the monetary policy [definição dos juros] to guarantee the convergence of inflation to its targets”.

[ad_2]

Source link