President of the BC stated that the work of Brazil’s monetary authority is well evaluated in Brazil and around the world
The president of the BC (Central Bank), Roberto Campos Neto, said that inflation in Brazil fell at little cost to society. He responded to criticism from the Minister of Labor and Employment, Luiz Marinho, who said that the monetary authority would have to “study more”.
He gave an interview to journalists this Thursday (March 28, 2024) to discuss the RTI (Quarterly Inflation Report). In the document, the monetary authority increased the estimate for Brazil’s GDP (Gross Domestic Product) growth in 2024 from 1.7% to 1.9%.
The interview was exceptionally carried out in São Paulo, at the Central Bank.
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Campos Neto said that he respects all criticism and that the Central Bank has a mission to bring inflation to the target. “This mission has been established in this way with great success not only in Brazil, but also in the rest of the world, because high inflation is something that generates a very large income imbalance and is something that affects the poorest population much more”he declared.
The BC president stated that high inflation caused inequality in Argentina and Türkiye. He declared that the inflation target is determined by the government, in the CMN (National Monetary Council).
“The important thing is to bring inflation to the target with as little cost to society as possible, […] with the minimum cost of growth, unemployment and credit retraction”he said. “When we look at what has been done in the last 1 and a half years, we see that Brazil is making inflation converge, even if this last mile is a little more painful […], but the Central Bank brought inflation [para a meta] at a very low cost“, he said.
Campos Neto stated that GDP growth in the 1st quarter was a surprise on the upside. The unemployment rate has surprisingly dropped, according to him.
“We understand all types of criticism. We are open to debate, but I think there is an assessment, both locally and internationally, that the work of the Central Bank was well done in terms of promoting a convergence of inflation at a low cost to society”said Campos Neto.
COLLEGIATE DEBATE
The Copom minutes said that “some members” argued that, if prospective uncertainty remains high in the future, “a slower pace of monetary easing may prove appropriate”.
Campos Neto stated that the term “some” refers to 2 or more and that is “hard to say” what each person thought, but the BC’s intention is to increase transparency.
He said that the Copom members were discussing the horizon and the type of pace was questioned, but that the Copom is not divided. “The decisions were unanimous”declared the president of the BC.
He stated that the minutes attempted to describe all types of analysis that was carried out during the 2 days of meetings.
MONETARY POLICY
The Copom (Monetary Policy Committee) – formed by Campos Neto and the 8 directors of the Central Bank – decided to reduce the Selic rate to 10.75% per year. They signaled a reduction of 0.5 percentage points at the next meeting, in May.
The BC’s announcement was the 6th consecutive reduction of 0.5 percentage points. The monetary authority indicated that it will slow down the pace of cuts from June onwards, according to the Copom minutes.
The RTI (Quarterly Inflation Report) showed that there is a 19% probability of inflation being above the target, which is 3%. The allowable range is 1.5% to 4.5%.
