BRASILIA--Brazil's economic recovery remains on track, but the central bank is monitoring its data and is ready to act if inflation gets out of hand, the head of the country's central bank said during a Senate hearing Tuesday.
Central bank President Alexandre Tombini offered a Senate committee a mildly optimistic view of the economy, even with recent trade and production readings being below expectations.
Citing the bank's leading indicators, Tombini said the economy is seeing an increase in investment--the government's goal after last year's disappointing 0.9% gross domestic product growth, which was hurt by meager investment.
Income growth and foreign direct investment should also keep the economy well oiled to achieve this year forecast growth or 3.5%, Tombini said.
He also reaffirmed the bank's commitment to a government-set inflation target of 4.5%, with a two-point tolerance range.
"The central bank never took its tools off the table," he said when answering questions about its willingness to raise interest rates to fight inflation.
Brazil's price indexes have been hard to bring down after they got close to the target range's 6.5% ceiling.
Moreover, the central bank has been criticized for watching inflation grow into dangerous territory without increasing interest rates--which now stand at a 7.25% historic low.
"Our [monetary] policy has already changed," said Tombini, referring to new language in the bank's communication that indicates it might increase rates if macro economic indicators show it is needed.
"We will increase rates if we need to," he told the Senate's committee, while trying to diffuse criticism the bank could be vulnerable to political pressures and avoid anti-growth measures ahead of next year's presidential elections.
Brazil's central bank is part of the Finance Ministry and some senators are considering new rules to increase its autonomy. Tombini said the bank is willing to help as needed.
nasdaq.com
Central bank President Alexandre Tombini offered a Senate committee a mildly optimistic view of the economy, even with recent trade and production readings being below expectations.
Citing the bank's leading indicators, Tombini said the economy is seeing an increase in investment--the government's goal after last year's disappointing 0.9% gross domestic product growth, which was hurt by meager investment.
Income growth and foreign direct investment should also keep the economy well oiled to achieve this year forecast growth or 3.5%, Tombini said.
He also reaffirmed the bank's commitment to a government-set inflation target of 4.5%, with a two-point tolerance range.
"The central bank never took its tools off the table," he said when answering questions about its willingness to raise interest rates to fight inflation.
Brazil's price indexes have been hard to bring down after they got close to the target range's 6.5% ceiling.
Moreover, the central bank has been criticized for watching inflation grow into dangerous territory without increasing interest rates--which now stand at a 7.25% historic low.
"Our [monetary] policy has already changed," said Tombini, referring to new language in the bank's communication that indicates it might increase rates if macro economic indicators show it is needed.
"We will increase rates if we need to," he told the Senate's committee, while trying to diffuse criticism the bank could be vulnerable to political pressures and avoid anti-growth measures ahead of next year's presidential elections.
Brazil's central bank is part of the Finance Ministry and some senators are considering new rules to increase its autonomy. Tombini said the bank is willing to help as needed.
nasdaq.com
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