Mantega: Falling inflation gives freedom to monetary policy.
Brazil's official inflation rate decreased to 0,36% in May, according to IBGE; with this result, the index has accumulated a 4,99% increase over the last 12 months.
Agency Brazil - The drop in inflation in May gives the government a degree of freedom to have a more flexible monetary policy, said Finance Minister Guido Mantega on Wednesday, June 6. The country's official inflation rate, measured by the Broad National Consumer Price Index (IPCA) and released today, decreased to 0,36% in May, according to the Brazilian Institute of Geography and Statistics (IBGE). With this result, the index has accumulated a 4,99% increase over the last 12 months.
"The IPCA of 0,36% is very good. It means that the annualized inflation over 12 months is below 5%. Therefore, it is falling compared to last year. This gives us a degree of freedom to have a more flexible monetary policy, with lower interest rates and increased credit," he said.
He noted that the increase in credit is nothing new and that this trend is expected to continue in June, with a reduction in interest rates. According to Mantega, measures to stimulate consumption and investment showed positive results last month.
"This [positive effect on the economy] will continue into June, and therefore we will have May and June with much higher growth rates than April and the first quarter. So, the economy is already on a positive path, with growth in Gross Domestic Product (GDP) and industrial output."
The minister also highlighted the growth in sales in the automotive sector and refuted criticism of the stimulus measures recently announced by the government. He stated that these initiatives are important because the sector grew less in the first quarter and has a significant weight in the Gross Domestic Product (GDP). "Now it is growing and will even grow more than other sectors. We will be rebuilding growth."