Central Bank: lower economic growth helps fight inflation
The Central Bank said investments will exceed the pace of consumption in the coming period
The economy has not lived up to its potential, which helps curb the inflation, stated the Central Bank’s Economic Policy Director Carlos Hamilton Araújo. In his view, the economy is going through a transition process and one of its characteristics is moderate consumption rate seen among families. A lower demand makes a weaker inflationary pressure. “For a while, the economy will see a growth rate lower than the one we had a few years ago, probably below its potential,” Araújo noted.
The director went on to point out that the consumption from the government is also likely to fall. “It hasn’t become very clear yet, but I believe that during this transition period we’ll see moderation in the government’s consumption.”
According to Araújo, with this revision, an increase in investments may come at a faster pace than that in consumption. “It’s consumption taking place more slowly than investment. It’s consumption walking, while investment runs,” he compared.
The director did not estimate how long this transition period will last. “The pace at which it’s going to happen will depend on how much stronger the trust among families and firms will get.”
In the Quarterly Inflation Report, released on Thursday (26), the Central Bank revised the GDP growth expected this year from 2 percent to 1.6 percent. The financial institution has also revised its estimate for the inflation rate measured by 2004’s National Broad Consumer Price Index (“IPCA”), which rose 0.3 percentage points to 6.4 percent, nearer the upper limit of the target (6.5%).
Translated by Fabrício Ferreira
Fonte: Central Bank: lower economic growth helps fight inflation
