The president of the Central Bank, Roberto Campos Neto, said this Monday (27), at the X Lisbon Legal Forum, in Portugal, that the worst moment of inflation in Brazil is behind him and that the interest rate shock will be able to slow down the inflationary process.
“We still have in Brazil a component of inflation acceleration, the last two numbers [de inflação] were, I think for the first time, within expectations. We think that the worst moment of inflation in Brazil is over,” he said.
In the 12-month period up to May, the IPCA (Broad Consumer Price Index) reached 11.73%, according to the IBGE (Brazilian Institute of Geography and Statistics) on June 9.
The preliminary presentation of the quarterly inflation report, made last Thursday (23), showed that the monetary authority expects the IPCA to remain at 11.31% in the 12-month period up to August. The BC estimate for 2022 inflation is 8.8%, above the target ceiling (5%).
In short-term projections, it considers increases of 0.81% in June, 0.84% ​​in July and 0.33% in August. In the quarter, it estimates an increase of 1.99%.
With the entry of June data, the IPCA-15 (Extended National Consumer Price Index 15) started to accumulate a high of 12.04% in 12 months, rising 0.69% in the month, slightly above market expectations.
In response to persistent and widespread inflation, on June 15, the Copom (Monetary Policy Committee) raised the basic interest rate (Selic) by 0.5 percentage point, to 13.25% per year. For the next meeting, in August, it signaled a new high of equal or lesser magnitude.
“We believe that our tool is capable of stopping this inflationary process and will stop the inflationary process. We believe that much of the work has already been done”, stated Campos Neto.
In the panel “Erosion of international public order and the future”, the BC president also commented that the monetary authority is still evaluating the impacts of tax relief measures approved by the government and being processed in Congress on inflation.
“We have some measures that are being designed by the government, we need to understand what the effect of these measures will be on the inflationary process, it is still not clear”, he said.
President Jair Bolsonaro (PL) sanctioned on Thursday (23) the law that sets a ceiling for ICMS rates on fuel, energy, transport and telecommunications.
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