“By the time we are all aligned, things will start to prosper”, says the Minister of Finance
When questioned about a possible drop in interest rates, the minister Fernando Haddad (Farm) said this Wednesday (June 14, 2023) that “the Central Bank is missing to join this effort”. The head of the economic team said he wanted to “believe” that the reduction of the basic interest rate, Selic, currently at 13.75%, takes place in a short time.
“I was talking about harmonization just now. The Three Powers harmonizing. The Central Bank is missing to join this effort, but I want to believe that we are about to see this happen. By the time we are all aligned, things will start to prosper.”he declared in an interview with journalists.
Watch (4min11s):
Haddad commented on the topic at the Ministry of Finance when talking about the change in the assessment of risk agency S&P (Standard & Poor’s) on the outlook for the Brazilian economy, which went from “stable” for “positive”. Since 2019, the country has not recorded this expectation.
the note is still BB- and may rise in the future. Here’s the full of the press release (446 KB, in English).
“I believe in the harmony between fiscal and monetary policies since the 1st interview I gave. Now, everything contributes to this harmonization happening faster than expected”he added.
Haddad thanked the National Congress and the STF (Federal Supreme Court) for the advances he assesses in the Brazilian economy.
“I would like to share with Congress and the Judiciary the initiatives that are being taken in the right direction of putting Brazil’s accounts in order, allowing us to advance a generation of employment and development. So, this is not possible from the Executive alone”he stated.
The minister said he wanted “as soon as possible, also thank the monetary authority, which, with each public statement, demonstrates that it is sensitive to the clamor of the business community, banks, risk agencies that it is possible for this harmony to be even greater”.
INFLATION
The head of the economic team argued that he was not thinking of changing the inflation targeting system adopted by Brazil since 1999. According to him, the device “It has produced results”.
“We are all against inflation. Inflation has reached double digits in the recent past, and that is undesirable for any country. We have a system of targets that was created over 20 years ago and has produced results. Nobody thinks about changing this system of goals. It can be improved, but his framework can be improved”.
Haddad, however, said that what is being discussed is “the conduct of this process”referring to interest rates in the country. “Cannot have a gag”he added.
The target for this year is 3.25%, with a tolerance interval of 1.5 percentage points. The floor is 1.75% and the ceiling is 4.75%. The matter should be discussed on June 29, when there is a meeting of the CMN (National Monetary Council), responsible for setting the inflation target.
The collegiate is chaired by the Minister of Finance and has the president of the BC (Central Bank), Roberto Campos Neto, and the Minister of Planning and Budget, Simone Tebet, as members.
Haddad emphasized that the discussion on interest “It’s healthy”. “Disagreement is not a sin. Diverging is part of democracy.”he declared.
RETAIL VERSUS INTEREST
The minister also said that retailers are concerned about interest rates. In the morning, Haddad attended the meeting between the president Luiz Inacio Lula da Silva (PT) and 24 businessmen representing the sector in the country.
“We had there IDV [Instituto para Desenvolvimento do Varejo]. All retail entrepreneurs meeting with the President of the Republic. 70% of the meeting, the discussion was about credit, about interest”Haddad said.
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