Next April 28th, the Central Bank of Brazil could approve a moderate raise of interest rates.
Brazilian Finance Minister Guido Mantega gavels the start of the G24 meeting during the IMF/World Bank Spring meetings on April 22, 2010 in Washington, DC (Getty Images)
Last Thursday, the brazilian finance minister Guido Mantega, downplayed concerns about the “overheating” of Brazil´s economy, saying that the Central Bank (BC) and the government will take necessary action if the risks of overheating increase.
Before the meeting of the Monetary Policy Committee (Copom) next week, when the Central Bank should raise the interest rates for the first time in nearly two years, Mantega said the economy is improving, but still horizontally. More following a L shape economic cycle.
The policy-makers will achieve the inflation targets in 2010, he said, predicting higher prices between 4.5 and 5 percent this year. That’s on par with the inflation target of 4.5 percent, with a tolerance of two percentage points more or less.
“Brazil’s economy is not overheated. If somehow that happens, we will take action,” Mantega told reporters on his arrival to a meeting of finance ministers in Washington DC.
The latest reports from the World Bank and International Monetary Fund (IMF) , released this week , showed the risk of overheating in the Brazilian economy, which has recovered quickly from the crisis supported helped by tax exemptions and by increased investment flows.
Analysts expect strongly that the Monetary Policy Committee raises interest rates at its meeting on April 28 at between 0.5 and 0.75 percentage point.