According to Bloomberg News, Central Bank of Brazil’s chief Roberto Campos Neto revealed that a benchmark rate of 12.75% must be adequate to bring inflation targets within the range while giving an interview on TV.
More on it
The policymakers have added as many as 975 basis points to the borrowing costs since March last year. This is perhaps one of the most aggressive tightening cycles during the ongoing pandemic, to 11.75%. They have pledged to be another surge in Selic rate by May, which may be as much as 12.75%.
According to Campos Neto, while talking to Band News Network said, emphasizing that the impact of tightening of monetary policies while navigating through the hike in rates can be assessed after a year or a year and a half. Neto went on to say that they understand the adjustment that was made is quite a huge one and enough to tame inflation.
Bloomberg News also reports that due to the uncertainties prevailing amidst the Ukrainian crisis, the central bank hinted at increasing the rates further; there was a probability for the same.
As far as the recent inflow of capital is concerned that has triggered the Brazilian rally, Campos Neto gave a clue about higher rates of interest, the escalating price of commodities. This government agenda has reformed, coupled with improved fiscal numbers. While some of the above factors are persistent, others are not.
When Campos was asked about the price of fuel, the questions were deflected related to price policies of Petrobras, noting that the role of central bank meetings on the state-run company with the officials of the government is entirely technical.
