RIO DE JANEIRO, BRAZIL – Speaking at an event with real estate executives, Campos Neto said the body estimates inflation will peak in September, but that he was surprised by the magnitude of the impact on energy prices.
Last week the Brazilian Institute of Geography and Statistics (IBGE) reported that Brazil’s monthly inflation rate climbed 1.25% in October and was above October 2002 records, when consumer prices rose 1.31%.
Latin America’s largest economy saw consumer prices rise in October largely due to the increase in fuel costs, which pushed annual inflation to 10.67%.
The official added that the Central Bank is ahead of the curve on interest rate hikes, but that the policy on financing costs must consider that Brazil has had serious spells of uncontrolled inflation.
“The cost of monetary policy not doing its job is higher for society,” he said. Interest rate hikes are likely to affect demand for mortgages and Campos Neto said there will be discussions about this at a meeting with Brazilian lenders’ executives on Friday.
Brazil’s Central Bank will lower its GDP growth projection for 2022 from the current estimate of 2.1%, but not by as much as market analysts forecast, Campos Neto added. The Central Bank’s latest Focus survey showed estimates of only 0.7% GDP growth for next year.
In addition, Campos Neto said that the Bank’s members were concerned about the current Covid-19 situation in Europe, the new South African variant and its impact on the global economy.
The São Paulo Stock Exchange, Latin America’s largest, closed Friday down 3.39% at 102,224 points, amid market concerns over the potential arrival of a new coronavirus variant detected in southern Africa called Omicron.
The main Bovespa index fell as much as 4% in the session, a reaction similar to that of international markets, after South African scientists alerted to a new variant, potentially more contagious and with multiple mutations.