Brazil’s Finance Minister Expresses Trust in Central Bank Officials Ahead of Rate Decision, Reports Reuters

Brazil’s Finance Minister Fernando Haddad expressed his trust in central bank officials when questioned about the potential for an interest rate increase at the upcoming monetary policy meeting scheduled for later this month.

In an interview with GloboNews, Haddad remarked that it would be inappropriate for him to comment on the actions the central bank should take. Policymakers are set to convene on September 17-18, with growing expectations for a rate hike following stronger-than-anticipated economic growth reported in the second quarter.

The central bank has maintained the benchmark interest rate at 10.5% since June, but it issued a warning in July that it would not hesitate to raise rates if necessary, given the increasingly difficult outlook for consumer prices. As of mid-August, annual inflation stood at 4.35%, compared to an official target of 3%.

Addressing the issue of rising social security expenditures, Haddad stated that the government is not currently discussing a new pension reform. However, he acknowledged that there are ongoing discussions regarding categories that were excluded from the previous reform and may eventually start contributing.

When asked about potential adjustments to other mandatory expenses that could ease fiscal pressure, such as decoupling certain expenditures from minimum wage growth, Haddad indicated that the government is open to discussing various topics. “However, politics has its own timing, and that requires due caution,” he noted.