Brazil Central Bank’s former director: “In 2022 we will have substantially lower inflation”
RIO DE JANEIRO, BRAZIL – On Friday, December 10, former Central Bank director José Júlio Senna discussed November’s IPCA (Extended Consumer Price Index) and compared it to inflation in other countries. According to the former director, inflation should “substantially” decrease next year.
The IPCA, an official index that measures the country’s inflation, rose 0.95% in November, compared to 1.25% the month before. Despite showing a slowdown, the figure is the highest for the month since 2015.
“This inflationary process we are experiencing is rare, it is a process that came with the pandemic, there is no way we can shape it, there is no way to draw upon it to make a projection of how far this inflation will go. But I think that in 2022 we will have a substantially lower inflation than in 2021, it will be difficult to exactly meet the target, but it will probably be lower,” Senna said.
Asked about the tightening of monetary policy, the former Central Bank director said that the process has been done gradually.
“The Central Bank began the withdrawal of the so-called monetary accommodation, that is, it began to make an upward adjustment in March. And I would say that the real interest rate in Brazil is already quite high, the monetary policy interest rate, the one that is controlled by the Central Bank and supposed to be in force for a year. When you take the inflation projection out of that number, you find the real interest rate. It’s now over 5.3%, that’s a lot of interest,” he says.
José Júlio Senna spoke about other countries experiencing the same inflation problem as Brazil, and highlighted the impacts caused by the pandemic in this regard.
“Current inflation is an international phenomenon and has its origin in the pandemic. The pandemic hindered the production of the most varied sectors, hindered the production of goods for the world, and families stopped buying services, particularly durable goods. It is a rather rare phenomenon and for this reason we find it difficult to understand how far it will go,” he said.
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