Brazil’s Finance Minister Fernando Haddad believes that a recession is unnecessary to reduce inflation. He affirmed that the economy can grow without significant consumer price increases. Haddad acknowledged the central bank’s need to manage inflation and expressed confidence in its ability to function effectively under current economic conditions.
On Thursday, Brazil’s Finance Minister Fernando Haddad asserted that the country does not require a recession to reduce inflation. He confidently stated that the economy can continue to grow without excessive increases in consumer prices. Haddad acknowledged the necessity for the central bank to take corrective measures to bring inflation back within the target range, especially following a recent increase in the benchmark interest rate to 14.25%.
Haddad emphasized the importance of maintaining inflation under control, stating, “We want inflation to remain increasingly under control. And we know that when it exceeds the target range, the central bank must act to bring it back to the level agreed upon with the National Monetary Council.” He expressed confidence in the central bank’s ability to manage inflation effectively.
Recent data indicates that consumer prices increased by 5.06% in the 12 months leading up to February, surpassing the official target of 3% with a permissible fluctuation of 1.5 percentage points. The central bank has projected a smaller interest rate hike for May, estimating inflation rates of 5.1% for the year 2025 and 3.9% for the third quarter of 2026, which will be influenced by current monetary policies.
Haddad recognized the challenges associated with both fiscal and inflation targets but emphasized the commitment to achieving these goals. The government aims for a zero primary deficit in the current year, and the budget bill sponsor in Congress has revised the projected balance to include a surplus of 15 billion reais. A vote on this budget bill is anticipated to occur on Thursday.
In summary, Brazil’s Finance Minister Fernando Haddad highlights the possibility of controlling inflation without necessitating a recession. He underscores the central bank’s crucial role in managing inflation while maintaining economic growth. With challenging targets set for fiscal stability, the government remains committed to achieving a balanced budget and aims for a surplus as legislative processes unfold.
Original Source: www.tradingview.com
