Frost can affect inflation in the short term, says Campos Neto

The president of the Central Bank, Roberto Campos Neto, said this Wednesday (18) that the monetary authority is evaluating the impact that the forecast frost in Brazil may have on food prices and short-term inflation.

At an event in Rio, Campos Neto said that discussions on the environment and sustainability are linked to monetary policy and financial stability and highlighted that climate shocks generate long-term negative effects on productivity and economic growth.

“I was having an inflation meeting and we were talking about the frost that is coming and what impact this could have on food and on short-term inflation,” said Campos Neto, referring to a conversation with Fernanda Guardado, director of BC’s International Affairs and Corporate Risk Management.

“We have seen that these various recent climatic shocks have negative impacts, heat waves, frosts, droughts, in the long term these shocks tend to have a more lasting effect, affecting productivity and economic growth,” he said.

In the opening panel of the Global Carbon Market congress, promoted by Banco do Brasil and Petrobras, Campos Neto also criticized the possible creation of a carbon tax and also said that many governments are taking isolated measures, with little coordination and market logic. .

“I hear a lot about a carbon tax, in some cases it seems justifiable, but we believe that the market price is the best allocator of resources in the economy,” he said.

According to Campos Neto, the BC intends to create a group to elaborate rules for the development of the carbon market in Brazil.

“What we have in terms of the next chapters is to study a taxonomy for Brazil, we want to form a group to start thinking about the rules that we are going to design for the carbon market to develop”, he projected.

Government must publish carbon credit market regulations

At the opening of the event, Minister Joaquim Leite (Environment) stated that the government should publish a decree this Wednesday to regulate the carbon credit market in Brazil.

“[O decreto] will bring innovative and modern elements, such as the concept of methane credit, the possibility of recording the carbon footprint of processes and activities”, he said.

“These novelties represent an important advance in the formation of economic instruments that enable the monetization of environmental assets and exports to the world,” he added.

In the first debate of the congress, alongside Leite, Minister Paulo Guedes (Economy) said that Brazil was seen as a problem for the world’s environmental economy and came to be recognized on the global stage as a “green, energy and food power”.

According to Guedes, Brazil is participating in the construction of a plan together with the OECD (Organization for Economic Cooperation and Development) that includes remuneration for countries that preserve natural resources.

This would be the third pillar of a project that also involves taxing pollution and rewarding technological innovations.

The minister pointed out that payment for environmental services can generate US$ 100 billion annually, estimating that Brazil can guarantee at least 15% to 20% of this amount.

“We need from now on to pay for the preservation of natural resources, this is an important key for Brazil, it has become the third pillar. Now we are going to tax pollution, we are going to reward technological innovations, [estamos] speaking of the first world, the great polluters and great innovators, in their view, and we will also reward the preservation of natural resources”, he said.