Brazil's Finance Minister Fernando Haddad voiced apprehension on Thursday over the central bank's decision to keep interest rates steady, saying elevated borrowing costs have implications for fiscal policy, long-term planning, and business decisions.
Speaking at an official event, he said that, even so, the government would continue to strive for the harmonization of monetary and fiscal policy. "Hopefully, our stumbling block will also be removed because I was really quite concerned about yesterday's decision by our (rate-setting committee) Copom," Haddad said. He remarked that the decision to keep interest rates unchanged on Wednesday was made despite Brazil having "one of the lowest inflation rates." Nevertheless, the minister said he would never apply political pressure on the central bank in a "pejorative sense."
Central bank policymakers
held interest rates steady at a cycle-high of 13.75% at a sixth consecutive policy meeting.
Although the central bank stated that it was "less likely" to resume rate hikes and affirmed that the government had eased concerns about fiscal policy with proposed new budget rules, it did not provide any specific indication of when rate cuts could be expected.
Leftist President Luiz Inacio Lula da Silva has criticized the central bank since his government took power in January, arguing that the current level of interest rates is unjustified amid cooling inflation and is hindering credit and economic growth.
In his speech, Haddad said the government had developed a plan for medium and long-term economic development, but has not yet presented it due to the initial challenges it faced.
"We are still prisoners of the past," he said, citing
"big liabilities" in Congress, the judiciary, and with states.
(Reporting by Marcela Ayres
Editing by Chris Reese and Paul Simao)
