2023-05-30 02:55:32
© Reuters. President of the Central Bank, Roberto Campos Neto, during a Senate session 02/15/2023 REUTERS/Adriano Machado
SAO PAULO (Reuters) -Core core inflation is, on average, cooling down, albeit more slowly than expected, and Brazil has now entered a time window in which this downward movement should continue, said the president of the Central Bank, Roberto Campos Neto, this Monday, at an event in Fortaleza.
Campos Neto pointed out that headline inflation in Brazil is “dropping a lot”, but that all countries have core inflation “quite high” compared to the inflation targets.
“We see that the average number of cores is falling, which is good, but more slowly than expected”, pointed out the BC president, referring to the Brazilian situation. “We still have high long-term inflation expectations,” he adds.
Despite the diagnosis, Campos Neto stated that the country has entered a “window” in which the fall in core inflation “will probably continue”.
At the same time, he stated that there is an “outbreak” of inflation in the world, but that Brazilian inflation is “lower than average”.
Campos Neto also addressed the current scenario for the growth of global economies. Regarding China, he said that the country is currently being “very burdened by consumption and investment, which tends not to persist”.
With regard to Brazil, the BC president stated that economic activity is surprising on the upside, with services on the rise and industry on the downswing – in this case, largely due to the automotive industry, which has a considerable share of the sector.
“The labor market has been a relatively positive surprise in Brazil,” he added. “Unemployment is at a much better level than before the pandemic. There is unemployment in industry, but job creation in services.”
When dealing with Brazilian growth, Campos Neto also defended the importance of actions that increase productivity over time.
“All the reforms that address the issue of productivity will be relevant”, he defended. “Brazil has made a lot of reforms, but with all the reforms, economists think our ability to generate growth without inflation has dropped,” she said.
(By Fabrício de CastroAdditional reporting by André RomaniEditing by Pedro Fonseca)
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