Inflation is under control, says Central Bank director.
According to the Director of Economic Policy at the Central Bank, Carlos Hamilton Araújo, "inflation over 12 months still shows an upward trend in the short term," but "it is under control and will remain under control."
Kelly Oliveira
Reporter from Agência Brasil
Brasilia – Despite the upward trend in prices in the short term, inflation is under control in the country, assessed the director of Economic Policy at the Central Bank (BC), Carlos Hamilton Araújo.
"Inflation over 12 months still shows an upward trend in the short term, and the balance of risks for the scenario appears unfavorable," he said. But, according to the director, "inflation in Brazil is under control and will remain under control."
According to the Inflation Report, released today (27) by the BC, inflation, measured by the Broad National Consumer Price Index (IPCA), should close this year at 6%. This projection is above the center of the target (4,5%) and below the upper limit (6,5%).
To try to contain rising prices, the Monetary Policy Committee (Copom) of the Central Bank raised the Selic rate by 0,25 percentage points in April, and intensified the adjustment in May, when the basic interest rate rose 0,5 percentage points to 8% per year.
According to the director, "in times like the present, monetary policy must remain especially vigilant in order to minimize the risk that high levels of inflation, such as those observed in the last twelve months, will persist in the relevant horizon."
The director emphasized that low and stable inflation is a prerequisite for the country's sustainable growth. According to him, high inflation reduces the confidence of families, investors, and businesses, and limits planning horizons. Araújo also cited the reduction in employment, income, and consumption, as well as greater income concentration, during periods of high inflation.
Araújo also said that Brazilian experience shows that periods of high inflation resulted in lower economic growth. From 1980 to 1985, with an average annual inflation rate of 147,1%, the real variation in Gross Domestic Product (GDP) was 2,6% (average). However, between 2004 and 2012, with inflation at 5,5%, GDP grew by an average of 3,9%.
Edited by: José Romildo