Brazil Central Bank Can Keep Lowering Rates, Campos Neto Says
The Brazilian Central Bank has the capacity to keep lowering interest rates, according to its president Roberto Campos Neto. He believes that the current economic conditions are favorable for the bank to continue its monetary policy of reducing rates.
Economic Conditions in Brazil
Brazil is currently in a period of economic recovery, with the country’s GDP growing by 4.1% in the third quarter of 2023. This is the highest growth rate since the fourth quarter of 2018. The Brazilian economy has been supported by a strong recovery in domestic demand, which has been driven by increased consumer spending and investment.
The country’s inflation rate has also been declining, with the annual inflation rate falling to 3.2% in October 2023, down from 4.2% in the same month last year. This is the lowest inflation rate since December 2018.
Central Bank’s Monetary Policy
The Brazilian Central Bank has been gradually reducing interest rates since the beginning of 2023. The bank has cut the benchmark Selic rate from 6.5% to 4.5% over the course of the year. This has been done in order to stimulate economic growth and reduce inflation.
The bank has also implemented other measures to support the economy, such as increasing the amount of liquidity in the banking system and providing credit to businesses.
Campos Neto’s View
Campos Neto believes that the current economic conditions are favorable for the bank to continue its monetary policy of reducing rates. He believes that the bank has the capacity to keep lowering interest rates in order to stimulate economic growth and reduce inflation.
Campos Neto also believes that the bank should continue to provide credit to businesses in order to support the economy. He believes that this will help to create jobs and increase consumer spending, which will in turn help to boost economic growth.
Risks to the Economy
Despite the positive economic outlook, there are still risks to the economy. The Brazilian economy is still vulnerable to external shocks, such as a global economic slowdown or a sharp decline in commodity prices.
In addition, the country’s fiscal situation is still precarious, with the government running a large budget deficit. This could put pressure on the Central Bank to raise interest rates in order to control inflation.
Conclusion
The Brazilian Central Bank has the capacity to keep lowering interest rates in order to stimulate economic growth and reduce inflation. This is according to its president Roberto Campos Neto, who believes that the current economic conditions are favorable for the bank to continue its monetary policy of reducing rates. However, there are still risks to the economy, such as external shocks and a precarious fiscal situation, which could put pressure on the Central Bank to raise interest rates.