The fight against inflation is important for rebuilding confidence in Brazil’s economy and boosting investment, central bank President Alexandre Tombini said, according to newspaper Estado de S. Paulo.
A recovery in confidence is necessary to maintain the process of gradual economic recovery, Tombini said, according to the Sao Paulo-based newspaper. The bank’s mission is combating inflation and that’s what it’s doing, Tombini said. Inflation will be slower this year than last year’s 5.84 percent, he said.
It’s up to the government to decide on any fiscal adjustment, the newspaper said, citing Tombini. It’s important that the government make clear its fiscal goals and how it plans to achieve them, Tombini said.
The recent weakening of the real will contribute to inflation, Tombini said, according to the newspaper. Citing the minutes to the July 9-10 central bank meeting, Tombini said that a 20 percent drop in the real against the dollar spurs inflation by one percentage point. Tombini said he isn’t concerned that Brazilian companies have borrowed in dollars because they are adequately hedged against currency fluctuations, according to Folha.