RIO DE JANEIRO, BRAZIL – The Brazilian real (R$) has fallen 9.4% against the dollar in 2021 in nominal terms, the second-worst performance in the world, better only than the Turkish lira, which has lost about 11%.
Commodities measured by the CRB index have jumped 10.2% this year, while inflation measured by the IPCA-15 is 5.52% in the 12 months to March, well above the target of 3.75% this year.
Central Bank president Campos Neto pointed out that it is impossible to discuss any scenario without talking about pandemics and that two things keep him awake at night: the need to reopen the economy – and, consequently, mass vaccination – and the lack of fiscal control, which, in turn, reduces the efficiency of monetary policy.
“For our whole scenario to come true, we need a reopening of the economy. For this, we need a vaccination that is efficient so that people go back to their normal lives,” said the head of the Central Bank, recalling the concept of “scary effects”, which Campos Neto explained as the effect of fear of resuming routines.
On the fiscal side, the bank president cited that Brazil is not more indebted among developing countries than Angola and Libya.
“It is tough for you to hold the monetary when the fiscal is out of control,” he said. “We need to have a fiscal consolidation. I always say that, in this sense, the Central Bank is not the pilot, it is the passenger. If we can’t find fiscal balance, the monetary side becomes much less efficient.”
Source: Moneytimes