Brazil’s Finance Minister Asserts Recession Not Essential to Curb Inflation

Brazil’s Finance Minister Fernando Haddad stated that a recession is not required to reduce inflation. He expressed confidence that the economy can continue growing while targeting effective inflation management. Consumer prices currently exceed the inflation target, necessitating actions from the central bank, which is expected to implement further rate hikes.

Brazil’s Finance Minister, Fernando Haddad, asserted that a recession is not a prerequisite for reducing inflation in the country. He emphasized that Brazil’s economy can continue to grow while effectively managing consumer price increases. Haddad acknowledged the necessity for the central bank to take steps to achieve the inflation targets set by policymakers.

In a radio interview, Haddad stated, “We want inflation to remain increasingly under control. And we know that when it exceeds the target range, the central bank must act to bring it back to the level agreed upon with the National Monetary Council.” He expressed confidence in the central bank’s ability to curb inflation while highlighting the government’s role in this effort.

Recent data indicated that consumer prices rose by 5.06% over the twelve months ending in February, surpassing the official target of 3%, which includes a tolerance margin. Following recent monetary policy discussions, the central bank foreshadowed another rate hike for May, projecting inflation rates of 5.1% for 2025 and 3.9% for the third quarter of 2026.

Haddad acknowledged the challenges of achieving both fiscal and inflation goals. The government seeks to attain a zero primary deficit for this fiscal year, with Congress’s budget bill sponsor presenting an optimistic projection of a 15 billion reais surplus. A vote on this crucial budget bill is anticipated to occur on Thursday.

In summary, Brazil’s Finance Minister Fernando Haddad maintains that a recession is not necessary to control inflation, urging the central bank to take appropriate actions to meet inflationary targets. Despite the current higher consumer price index, Haddad remains optimistic about the government’s fiscal discipline and upcoming legislative measures aimed at ensuring economic stability.

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