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Silva Would Shoot for 3% Inflation as Brazil’s President

Presidential candidate Marina Silva would work to slow Brazil’s inflation by more than half during her four-year term if elected in October, said Maria Alice Setubal, an aide responsible for drafting her platform.

Silva, who replaced Eduardo Campos as presidential candidate for the Brazilian Socialist Party after he died in a plane crash, plans to cut consumer price increases to 3 percent by the end of 2018, Neca Setubal, as the aide is known in Brazil, said in a phone interview. She said Silva would shoot for the government’s 4.5 percent inflation target from the start and would support central bank autonomy to set monetary policy.

“Those who know Marina know she will follow through on what she is saying now,” said Neca Setubal, who is sister to Roberto Setubal, chief executive officer of Latin America’s biggest bank by market value, Itau Unibanco Holding SA. “Marina will commit to all pledges made by Eduardo Campos in relation to inflation targeting, tax reform” and central bank autonomy.

Silva, 59, has upended the election by attracting the support of undecided voters before she unexpectedly moved from running mate to presidential candidate. The first poll with Silva’s name on a ballot shows President Dilma Rousseff would be forced into a runoff. Senator Aecio Neves may not make it to the second round, the poll by Datafolha shows.

Statistically Tied

The voters surveyed by Datafolha who said they were undecided or would cancel their ballot fell by 10 percentage points to 17 percent from July to August, the first survey with Silva’s name.

Silva is statistically tied in second place with Neves with 21 percent and 20 percent of the support respectively, according to the Aug 14-15 survey that has a margin of error of plus or minus two percentage points. Rousseff had 36 percent support, less than the sum of all other 10 candidates that are needed to ensure her a victory on the first round on Oct. 5.

Silva, who worked as a maid before entering politics, is the candidate that represents the Brazilians who took to the streets last year to protest against corruption, the rising cost of living, slower growth and misspending of public funds, said Rafael Cortez, political analyst at Sao Paulo-based research company Tendencias Consultoria Integrada.

“She didn’t win votes from either Dilma or Aecio,” Cortez said in a phone interview. “She gained amid the discontent. She has the protest vote.”

Slowing Economy

Brazil’s economy is slowing after above-target inflation eroded business and consumer confidence.

Analysts surveyed by the central bank have cut their 2014 growth forecast for 12 straight weeks, to 0.79 percent. That would be the weakest performance since the economy contracted in 2009. They forecast inflation will close 2014 at 6.25 percent, the worst end of a year since 2011.

Silva’s economic adviser, Eduardo Giannetti, said in a May interview Brazil needs to rein in spending and increase interest rates at the outset of the next government to help ease inflationary pressure.

The central bank kept borrowing costs unchanged at 11 percent in its previous two meetings, after raising them by 3.75 percentage points in the year through April. The bank targets inflation of 4.5 percent with leeway of plus or minus two percentage points.

While Silva’s campaign supports the kind of economic policy investors want, doubts remain whether the candidate would carry it out as president, Jankiel Santos, chief economist at Banco Espirito Santo de Investimento, said.

“The discourse is extremely in line with what people suppose is a more reasonable economic policy,” he said by phone. “The ’but’ is the implementation.”

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