Brazil’s Interest Rate Outlook: What the Finance Minister Says

The Brazilian government is still open to cutting borrowing costs, according to the finance minister. He said this while noting that the decision ultimately belongs to the central bank. Last week, Brazil’s central bank lowered its key rate for a third meeting in a row. It set the new level at 14. 25% and left future moves undecided, even though it warned that inflation could climb higher. To help keep prices steady, the finance ministry has earmarked 23 billion reais (about $4. 5 billion) in the budget for tighter fiscal policy. This move is meant to support the central bank’s efforts to control inflation.

The minister also talked about how Brazil measures price changes. He has backed studies that could make the inflation calculation better reflect what households actually spend, but he stopped short of changing the index just because it rises. Recent data shows Brazil’s yearly inflation hit 4. 72% in May, above the central bank’s goal of 3%. The bank now expects inflation to reach about 5. 2% for the entire year.

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