Resisting Lula, Brazil's Central Bank Chief Makes Case To Keep Inflation Targets  

 

• Brazil's central bank is not looking to change inflation targets, Governor Roberto Campos Neto said on Monday, resisting calls from President Luiz Inacio Lula da Silva to raise targets.
• Campos Neto said that he would oppose any change to the targets, warning that Brazil was currently facing a higher risk premium in financial markets, partly as a result of the debate over whether to set higher inflation targets.
• "Our opinion today is that there is no gain in credibility simply by raising the target," Campos Neto said in a high-profile televised interview on TV Cultura's Roda Viva.
• He said the bank had studied ways to improve its inflation-targeting regime, but that did not extend to studying changing targets.
• "We do not consider the target to be an instrument of monetary policy," Campos Neto said.
• Lula has described the height of the official benchmark interest rate, which the central bank left unchanged at a six-year high of 13.75% earlier this month, as an obstacle to economic growth.

(Source: Reuters)