The central bank chief stated that increasing the inflation target to gain flexibility in monetary policy would actually have the opposite effect by making agents adjust their inflation expectations upwards.
"The target in several Latin American countries is 3%," he said.
This year's inflation target is 3.25%, falling to 3% in 2024 and 2025, with a tolerance of 1.5 percentage points up or down.
Leftist Lula has said that Brazil should pursue its own inflation pattern, instead of replicating what he called the European model, having recently suggested a target of 4.5% as it has been in the past.
Campos Neto also dismissed calls by government
economists and political allies to lower the country's interest
rate, which is currently at a six-year high of 13.75%, saying
that attempts to reduce the short-term interest rate without
credibility would result in a steepening of the yield curve.
He warned that strategies to control the yield curve
have a "limited life," as seen in the case of Turkey, and would
force the government to finance its debt increasingly in the
short term, which would be "terrible."
Instead, Campos Neto emphasized the need to focus on
improving credibility to attract foreign investment, saying that
"this is not the time to think about experimenting."
(Reporting by Marcela Ayres, editing by Ed Osmond)
