Government to take steps to bring inflation to target

Altamir Lopes, Central Bank Director for Economic Policy, said Thursday (Nov. 5) that the inflation will not reach the 4.5% target until 2017 and said that the Central Bank will adopt the necessary measures to meet this goal.

“The Central Bank has been working. Ever since March 2013, the cycle of [inflation] hikes, has been among the strongest in history,” Lopes said. Therefore, the bank's Monetary Policy Committee (COPOM), in charge of establishing the SELIC key interest rate raised it for the seventh time in a row. In the last two meetings, however, COPOM chose to keep the Selic at 14.25% per annum.

“The choice made by the Central Bank is to keep the SELIC rate for a period long enough to meet the target,” the director said. Previously, the Central Bank was expecting to reach the target next year. At the latest COPOM session, however, the forecast changed to 2017.

According to Lopes, the Central Bank will work to take the inflation rate as close to the target as possible in 2016 and reach 4.5% in 2017. He added that he does not think surpassing the target's upper limit of 6.5% in 2016 is possible.

In the director's view, the long-term outlook point toward a boost in economic activity, with inflation under control, the fiscal adjustment in progress, an increase in exports and a change in imports, and a likely improvement in the global economy. He went on to say that the dollar has risen much more considerably in Brazil than in other Latin American countries due to the influence of non-economic factors, but, he argued, exporting sectors of the economy should “benefit significantly” from the rise of the US currency.

Translated by Fabrício Ferreira