The Central Bank of Brazil’s Economic Activity Index (IBC-Br), often referred to as a preview of the Gross Domestic Product (GDP), grew by 0.5% in April.
The bank released this data on Friday, 16th, featuring seasonally adjusted figures.
The previous month had seen a 0.15% decrease in the indicator that tracks the progress of the GDP.
According to Hugo Garbe, chief economist at G11 Finance and professor of economics and finance at Mackenzie Presbyterian University, the IBC-Br result shows that the Central Bank’s monetary policy is on the right track.
Due to the country’s fiscal and inflationary risks, the institution has kept the current Selic rate at 13.75% per annum.
“The latest result demonstrates the resilience of the Brazilian economy and stronger economic activity than expected,” said Garbe.
“This is naturally good for the economy. However, it supports the Central Bank’s caution in reducing interest rates since demand inflation can be one of the side effects.
The Central Bank independently guides the interest rate policy. It aims to keep inflation within the target in an environment conducive to GDP growth.
Roberto Campos Neto has headed the institution since February 2019, having been appointed during Bolsonaro’s government.
In 2021, The Banker, a British finance magazine, named Campos Neto the Central Bank President of the Year.
He received the Global and Americas category award for his management during the Covid-19 pandemic.
After hitting a historical low of 2% per annum in 2020, the Selic rate began to rise in April 2021, reaching 13.75% in June 2022.
The rate is determined by the Central Bank’s Monetary Policy Committee. Inflationary effects induced by the Covid-19 pandemic led the Central Bank to elevate the Selic to its current level.
Despite this, Brazil’s GDP recorded one of the best performances among the world’s major economies last year.