Published on 08/26/2022 11:54 AM / Updated on 08/26/2022 11:54 AM
(credit: Pablo Valadares/House)
Despite members of Jair Bolsonaro’s government (PL) celebrating with the broad consumer price index (IPCA) inflation falling in June and pointing to a new low in August due to the 0.73% drop in this month’s preview due to the fuel exemption, Central Bank President, Roberto Campos showed Neto, caution against easing monetary policy.
“We think we can’t let our guard down. We celebrate, of course, a lower inflation number, but we always qualify that there is a big step up in that last number, because it has a nutritional component (inflation),” Campos Neto said. ) Much higher than we expected. ), in a presentation at an event hosted by the Director 1618 Investimentos, in São Paulo.
Inflation is slowing down, but you have to look very carefully. But we understand that Brazil has advanced in this process and in a bold way,” he added, referring to the fact that the country was one of the first countries to start the process of increasing interest rates, until 2021, while developed countries such as the United States started this process only recently, and according to him Inflation there is more resistant than Brazil to the start of the slowdown process.However, he stressed that the Central Bank of Brazil will remain “vigilant in its mission”.
After recording a decline of 0.68% in July, the IPCA achieved a rise of 10.07% in 12 months, down from 11.89% recorded in the same period through May. In the meeting held on the second and third of this month, the Monetary Policy Committee (Copom) raised the basic rate of economy (Selic) by 0.50 percentage points, from 13.25% to 13.75% annually, and also indicated another increase. , at a lower volume, at the September meeting.
According to market expectations, inflation will slow this year, but not enough to meet the upper range of the target, which is a ceiling of 5%. IPCA’s new year-end market forecast ranges between 6.5% and 7% gains. In addition, it has gained strength next year, and remains above the target ceiling set by the National Monetary Council (CMN), which is 4.75%.
No wonder market analysts consider BC to have abandoned its targets for this year and next and started focusing only on 2024. With this, there are still doubts among analysts whether there will be an increase of 0.25 percentage points to 14% per year. Whether BC will keep Selic at 13.75%, the highest since December 2016, at the upcoming Copom meeting, scheduled for September 20-21.
Gross domestic product
During the lecture, Campos Neto once again made a positive analysis of the Brazilian economy’s recovery this year, highlighting upward revisions to market estimates of Gross Domestic Product (GDP) this year, but avoided commenting on the slowdown process. Continuing from the second half of this year which will peak in 2023, reflecting the negative impact of monetary policy – which has a lagging effect from the interest rate hike, which has occurred since March 2021, when Selic was at its lowest levels. Historical level at a rate of 2% per year. Currently, market estimates expect a 2.02% rise in GDP this year, and a rise to 0.39% next year.
Then, during questions, the BC chief acknowledged that there is a downward movement in GDP growth next year, because the impact of higher interest rates could take up to 18 months to affect economic activity. He also warned that the ongoing global slowdown “also has an impact on the Brazilian market.”
The President of British Columbia also spoke again about the opportunities available to Brazil, in this global context of energy transition, for the development of sustainable energy, including the export of this potential to other countries. The world needs inputs with cheap energy and labour. He stressed that Brazil has the potential to produce sustainable energy.
When asked about the regulation of the cryptocurrency market, Campos Neto was ambiguous and said that there is a development in this market, especially with regard to lower-energy mining. He avoided talking about cryptocurrencies, but rather about crypto assets, and stated that the co-existence of digital modalities is possible.
“I focus more on the blockchain process of taking something of value and doing multiple filters,” he said, avoiding commenting on a specific asset. “I am not betting on the currency, but on technology and coexistence (of paradigms),” he said, without mentioning how the process of regulating this market, as many currencies have lost value dramatically, causing losses to investors who still do not know how to choose the right And, much less, escape from hierarchical schemes. It is not the central bank that should determine which currency people should buy. People need to know what they are buying,” he said.
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