“Bringing inflation down is critical to protect vulnerable households, who are hurt the most by high inflation. The monetary policy stance is consistent with reducing inflation to target, in line with the inflation targeting framework that has served Brazil well,” IMF said after the visit.
“The authorities are embarking on an ambitious agenda to steer a sustainable, inclusive, and green economy. Opportunities for greener growth are considerable, including for leveraging Brazil’s competitive advantage in renewable energies,” it said.
“Headline inflation has rapidly declined from last year’s peak, but core inflation remains elevated, while inflation expectations have edged up. Headline inflation is expected to converge to the target by mid-2025. The outlook is subject to downside risks. However, strong buffers, including a sound financial system, large cash buffers by the public sector, and adequate international reserves, support resilience,” IMF’s Ana Corbacho, who led the discussions this year, said in a press release.
IMF recommended ‘a more ambitious’ fiscal effort that continues beyond 2026 to put debt on a firmly declining path, while protecting social and investment spending, supported by an enhanced fiscal framework, further broadening of the tax base, and reforms that tackle spending rigidities.
“Bringing inflation down is critical to protect vulnerable households, who are hurt the most by high inflation. The monetary policy stance is consistent with reducing inflation to target, in line with the inflation targeting framework that has served Brazil well,” Corbacho added.
ALCHEMPro News Desk (DS)
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