Roberto Campos Neto, the head of Brazils Central Bank, recently shared his thoughts on the countrys economic situation.
He spoke about inflation expectations and interest rates during an interview in Washington with CNBC.Campos Neto explained that Brazil is at a different stage compared to other countries.
Brazil was the first to raise interest rates and is now the first to cut them.The countrys economy is showing resilience, with a tight job market and a positive output gap.
The Central Bank chief expressed concern about inflation expectations moving away from the target.He stressed the importance of communicating the banks commitment to reaching its inflation goal.
Brazils history with inflation makes this particularly crucial.The current inflation target in Brazil is 3%, with a tolerance range of 1.5 percentage points.
Market projections for 2024 inflation stand at 4.50%, which is at the upper limit of the target range.
For 2025, the forecast is 3.99%.Central Bank Chief Addresses Inflation Concerns and Interest Rate Challenges in Brazil.
(Photo Internet reproduction)Campos Neto emphasized the need for positive fiscal changes to achieve lower interest rates.
He stated that its hard to imagine much lower rates without significant improvements in fiscal policy.Economic Outlook and Interest RateThe current base interest rate in Brazil is 12.75% (R$ 12,750 / $2,276).
When asked about his impartiality, Campos Neto pointed out that the Central Bank raised rates during the 2022 election campaign.He explained his closeness to the previous government was due to efforts to secure the banks operational autonomy.
Regarding the global economic outlook, Campos Neto expects a soft landing for the U.S.
economy.He noted that the upcoming U.S.
election might lead to inflationary policies, potentially keeping interest rates higher than expected.
Campos Neto also mentioned concerns about Chinas future growth.He highlighted potential implications for Brazil if Chinas growth slows due to global trade barriers.
This situation could impact Brazils economic strategies in the coming years.