Brazil central bank chief concerned with doubts about fiscal target
Reuters
Published Nov 09, 2023 09:57AM ET
Updated Nov 09, 2023 10:27AM ET
By Rodrigo Campos and Dan Burns
NEW YORK (Reuters) -Brazil's central bank chief Roberto Campos Neto on Thursday said any change to the country's fiscal target would raise concerns, following comments by President Luiz Inacio Lula da Silva casting doubt on the government's vow to erase a budget deficit.
Campos Neto told the Reuters NEXT conference in New York that "there is a lot of uncertainty on whether Brazil is going to be able to actually have a sustainable fiscal path," adding that it pushes up risk premiums and affects monetary policy.
"The only reason why the central bank worries about that is not because of the fiscal (target) itself, is because that it impacts variables that are important for our decision-making process," he said, mentioning potential effects on the foreign exchange and interest rate futures markets.
In late October, Lula said his government did not need to erase its primary budget deficit next year, as previously proposed to Congress under new fiscal rules – comments that jarred financial markets and shifted interest rate forecasts.
Since then, Finance Minister Fernando Haddad has broadly reaffirmed Brazil's commitment to "fiscal balance," but lawmakers involved in next year's budget bill are hinting heavily that they aim to loosen the zero-deficit target.
In Thursday's interview, Campos Neto highlighted that Brazil has approved important reforms since the COVID pandemic, including an overhaul on consumption taxes, which passed the Senate on Wednesday, but acknowledged the uncertainty on fiscal policy.
"And that influences a lot of the variables that are important for us when you make decisions in monetary policy," he reinforced.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.