(Adds comments from Neto)
BRASILIA, April 5 (Reuters) - Brazil central bank
governor Roberto Campos Neto on Wednesday said the fiscal
efforts made so far by President Luiz Inacio Lula da Silva's
government are positive and have eliminated the risk of a "more
uncoordinated" debt trajectory after the presentation of a
highly anticipated fiscal framework.
Speaking at a Bradesco BBI-hosted event, Campos Neto
emphasized, however, that there is no mechanical relationship
between the fiscal situation and interest rates.
He added that the critical factor is how fiscal measures
impact inflation expectations and that the central bank will
assess how the approval process in Congress for the new fiscal
framework will unfold.
Campos Neto said that demanding a very large spending
adjustment from the government must be done "with more
parsimony" since Brazil has not been able to do so in its recent
history.
Leftist Lula has repeatedly criticized the central bank
and its chief for high borrowing costs amid cooling inflation.
The bank's benchmark interest rate has been kept steady at a
six-year high of 13.75% since September.
Campos Neto stated that nothing in the rate-setting
committee Copom is a political decision and that all aspects
considered are technical.
Regarding the discussion of increasing inflation
targets, he emphasized that the central bank does not believe
policymakers gain degrees of freedom with this change.
Campos Neto also stated that any type of noise,
including on inflation targets, affects inflation expectations.
"Reducing noise is important," he said, adding that the
government sets the inflation target, and it is important for
the central bank to reinforce that it will pursue it.
(Reporting by Marcela Ayres; Editing by Louise Heavens, Steven
Grattan and Mark Porter)
