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HomeEconomyBrazil's central bank chief speaks amid speculation inflation target could change

Brazil's central bank chief speaks amid speculation inflation target could change

BRASILIA (Reuters) – Brazil’s central bank chief Roberto Campos Neto will give a high-profile television interview on Brazil’s monetary policy on Monday, with President Luiz Inacio Lula Dazi Silva questioned Brazil’s monetary policy, which has repeatedly called for a higher inflation target.

Lula’s stance fueled speculation that Brazil’s top economic policy body, the National Monetary Council (CMN), may raise the official target at a meeting on Thursday.

On TV Cultura’s Roda Viva program, Campos Neto will be the 75 First central banker to be interviewed since Arminio Fraga. This show will air on 10 pm (79 GMT)

Lu La criticized the country’s benchmark interest rate, saying it was holding back economic growth at a cycle high 10. 25%, unchanged from earlier this month.

The leftist president argued that Brazil, which has the world’s highest real interest rates, is unreasonable in the face of slowing consumer price increases and that the country should raise its inflation target.

The CMN usually decides on the inflation target in June, but such a call could be expected. It is made up of the finance minister, the planning minister and the governor of the central bank, meaning the federal government has two of the three votes.

Lula’s comments led to a deterioration in inflation expectations and a steepening of the yield curve, prompting policy makers to emphasize that inflation off-target prevented them from starting to cut their Selic rates.

The inflation target for this year is 3.10%, between 2024 and 2025, with a tolerance zone of 1.5 points in all cases. The central bank’s weekly survey of private economists forecast inflation at 5.79% in 2023 at

at 4%, and 2025 at 3.6%.

But some economists issued a manifesto in support of questioning the current level of interest rates, Lula’s political allies continue to echo the president’s words, calls from his Workers’ Party (PT) Leaders of the House of Commons held a street protest in front of the central bank on Tuesday.

“Uncertainty about economic policy commitment to low inflation, including the central bank’s pursuit of the inflation target set by the CMN, raises questions about the current monetary regime,” said Itaú chief economist Mario Mesquita.



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