Brazil’s Haddad backs longer-term target for inflation, no talk of goal change
2023.05.05 10:38
© Reuters. Brazil’s Finance Minister Fernando Haddad reacts while speaking with journalists after a meeting with Brazil’s Central Bank President Roberto Campos Neto in Brasilia, Brazil April 3, 2023. REUTERS/Ueslei Marcelino
BRASILIA (Reuters) – Brazilian Finance Minister Fernando Haddad said on Friday that he favored taking a long-term view of inflation and that the central bank could begin cutting interest rates.
He added, however, that the government could not pre-empt any decision on changing the inflation targets set by the National Monetary Council consisting of himself, the planning minister, and the central bank governor.
“I think continuous inflation targeting is much better than looking at the calendar year,” Haddad said in an interview with CBN radio.
The National Monetary Council will set the annual inflation target for the coming three years at its June meeting, while also reaffirming its previously established targets.
President Luiz Inacio Lula da Silva has advocated for higher targets and a less restrictive monetary policy. The central bank, meanwhile, has suggested the discussion may have raised inflation expectations, requiring interest rates to remain at 13.75%, the highest they have been in the current cycle.
Brazil’s inflation rate slowed more than expected in the year to mid-April, reaching its lowest point since late 2020.
Haddad reiterated criticism of the central bank, saying the bank could already begin cutting rates. He said next year’s inflation projection was “very moderate.”
Following media reports naming his executive secretary Gabriel Galipolo as a potential nominee for the central bank’s board, the minister said the government would announce the picks once a decision has been made.
However, he did acknowledge Galipolo could be a candidate for various government positions.
Amid government efforts to prevent an escalation of the public debt, Haddad said measures would be taken until the accounts were balanced.
He said he had asked the Senate to vote on a measure regarding the taxation of the transfer price of multinational companies and said he expected proposed fiscal rules to be voted on by the Lower House in May and a tax reform to be voted on in June.
Haddad also said the government “has everything” to establish a successful thesis in a high-profile tax case in the Supreme Court, potentially increasing revenues by nearly 90 billion reais ($18 billion) annually.
The case has already been ruled on by a lower court.
($1 = 4.9842 reais)
