BRASILIA (Reuters) – Brazil Planning Minister Simone Tebet said on Tuesday that she believes that conditions should be in place for the central bank to deliver interest-rate cuts in the second half of the year, even if the move is small.
“Depending on foreign policy, which we do not control, I have the impression that as early as the second half of this year we may start to see a decline, even if minimal, in interest rates in Brazil,” she said, stressing that domestic policy was “under control, with public accounts in order.”
The forecast contrasts with the outlook of private economists polled weekly by the central bank, who see the Selic rate peaking at 15% this year, with easing only beginning at the first policy meeting next year.
Tebet also said in an interview with a government radio station that Brazil’s economic growth should exceed government forecasts, though it is unlikely to reach 3% expansion this year.
The government’s latest projection sees Latin America’s largest economy rising 2.3% this year, slowing from 3.4% growth in 2024.
Brazil’s central bank has reiterated that an economic slowdown is necessary to bring inflation to its official 3% target.
Since beginning its tightening cycle in September, the central bank has raised its benchmark interest rate by 375 basis points to 14.25%, signaling another hike in May, albeit smaller than the increase of 100 basis points applied last week.
Policymakers said in the minutes of its latest policy decision released on Tuesday that heightened uncertainty prevented them from providing guidance beyond the next meeting.
Tebet said she sees no inflationary impact from recent measures announced by President Luiz Inacio Lula da Silva to boost consumption, including a broader income-tax exemption to cover the middle class.
According to the minister, the move is not surprising as it fulfills a presidential campaign promise.
(Reporting by Gabriel Araujo; Writing by Marcela Ayres; Editing by Mark Porter)
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