May 27, 2015 –
Brazil’s Central Bank President Alexandre Tombini reaffirmed yesterday his pledge to drive down inflation to the official target rate by December 2016.
The bank will persevere to bring the inflation rate to 4.5%, from the current 8.2% level, Mr. Tombini said in opening remarks at his twice-a-year hearing at the congressional Budget Committee.
The bank will work “to hit the 4.5% mark” in December, he said, using strongly hawkish language that analysts say is meant to drive down inflation expectations.
Economists surveyed by the central bank forecast 5.5% inflation by the end of next year.
Mr. Tombini said government efforts to cut costs and reduce debt are likely to increase the effects of higher borrowing costs in reducing inflation.
In the past two years, the central bank has increased its Selic rate to 13.25% from 7.25%. Another increase is expected in June.
The combination of tighter fiscal and monetary policies happened at a time of economic weakness. According to various economic forecasts, the country’s gross domestic product is likely to contract by more than 1% this year.
Mr. Tombini said that signs of economic recovery should appear as soon as in the second half of the year.