UPDATE 2-Brazil inflation slows further in April as government calls for rate cuts

Kitco Media
By Reuters
Published:
Updated:
Reuters
(Adds comment from finance minister in last paragraphs) SAO PAULO, May 12 (Reuters) - Consumer price inflation in Brazil continued to slow in April, data from statistics agency IBGE showed on Friday, likely helping President Luiz Inacio Lula da Silva in his crusade against high interest rates. Inflation as measured by the benchmark IPCA index reached 4.18% in the year through April, IBGE said, above a market consensus of 4.10% in a Reuters poll but down from 4.65% in the previous month and the lowest reading since October 2020. "Overall, the inflation picture continues to improve in Brazil, which is opening the door to rate cuts during the second half of the year," Pantheon Macroeconomics' chief Latin America economist Andres Abadia said. Lula has been calling for lending costs to be lowered from their current six-year high of 13.75%, in place since August, but central bank governor Roberto Campos Neto has ruled out an imminent cut citing inflationary concerns. Inflation expectations for the end of 2023 seem to have stabilized around 6% in a weekly central bank survey of private economists after several consecutive increases, but that would still be well above the official target of 3.25%. In April alone, according to IBGE, inflation reached 0.61%, above market forecasts of 0.54% as healthcare and food and beverage costs accelerated, but also below the previous month's 0.71%. Finance Minister Fernando Haddad said in an interview with local newspaper O Estado de S. Paulo on Friday that projected inflation for the upcoming year, which serves as the basis for the bank's monetary policy decisions, "is well under control."


He also said he hadn't spoken with his executive secretary Gabriel Galipolo regarding the bank's presidency, with Campos Neto due to step down in December 2024. Haddad said this week Galipolo would be nominated to be the bank's monetary policy director.
(Reporting by Gabriel Araujo; Editing by Steven Grattan, Kirsten Donovan)

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