Brazil’s central bank President Alexandre Tombini reiterated that previous statements saying policy makers will end cuts to the benchmark rate at a level “slightly above” the historical low of 8.75 remain in place.
“At the moment that statement by the central bank remains valid,” Tombini said in an interview with Globo News television yesterday. “Inflation is moving as expected.”
After reducing borrowing costs to 9.75 percent in March, the bank has twice signaled that cuts that began in August will continue. In the minutes of its March 6-7 meeting, the board said it saw a “high probability” of the rate falling to “levels slightly above the historical lows and stabilizing” there. The same comment was made in a March 29 report.
Since August, President Dilma Rousseff’s administration has reduced the benchmark interest rate five times, trimmed taxes on consumer goods, increased subsidized loans by the state development bank and pledged to boost public investments to fuel economic growth. The measures led analysts to forecast the central bank will miss its inflation target of 4.5 percent this year, according to a central bank survey published yesterday.
Consumer prices rose 0.21 percent in March, less than expected by all 50 analysts surveyed by Bloomberg, who had a median estimate of 0.37 percent. Annual inflation slowed to 5.24 percent, the lowest rate in 17 months.
“The central bank’s policy was aimed at re-stabilizing inflation. I believe were are managing to do it,” Tombini said. “At the moment the numbers indicate the policy to fight inflation was right.’”
He said the central bank is seeking to bring inflation back to the 4.5 percent target by year-end.
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