By Paula Laier
SAO PAULO, Feb 15 (Reuters) - Some of Brazil's top hedge
fund managers on Wednesday dubbed the country's inflation goals
"unreachable," calling for an upward change as the government
and central bank clash over high interest rates aimed at
bringing consumer prices back to target.
Managers at SPX Capital, Verde Asset and JGP agreed it was
now difficult for the country to meet targets set amidst the
COVID-19 pandemic in 2020, before inflationary shocks sent
global central banks hiking interest rates.
Their remarks come as Brazil's new leftist administration
complains about how low inflation targets are, with President
Luiz Inacio Lula da Silva saying high interest rates set to
reduce consumer prices would instead hinder economic growth.
Brazil has an inflation target of 3.25% for 2023 and 3% for
2024 and 2025, plus or minus 1.5 percentage points, while the
local benchmark interest rate stands at a six-year high of
13.75%.
"The inflation target is just too tight, too ambitious for
us to meet," SPX's co-founder Rogerio Xavier said, calling for
it to be boosted. "There is no problem in changing it. There is
no point in saying you'll pursue 3.25% and delivering 6%".
He noted the country went through several inflationary
situations in recent years, including the pandemic, the Ukraine
war, a shift towards clean energy, and supply chain disruptions.
Annual inflation ended January at 5.77%, and local markets
have been volatile in recent weeks due to the clash between
government officials and the independent central bank over high
interest rates.
Verde co-founder Luis Stuhlberger said "pursuing unrealistic
inflation goals" was not a good thing for Brazil at the moment,
while JPG's founding partner Andre Jakurski said he did not
think meeting the target was possible.
Still, both said the top government priority should now be
presenting a new fiscal framework to replace the constitutional
spending cap, breached by the administration for it to boost
social spending.
Earlier in the day, Finance Minister Fernando Haddad pledged
to present the new framework in March. He also said changing
inflation targets was not on the agenda of the National Monetary
Council's eagerly awaited meeting on Thursday.
(Reporting by Paula Arend Laier; Writing by Gabriel Araujo
Editing by Marguerita Choy)
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