DO NOT envy Brazil’s monetary policymakers. The economy is faltering. With business confidence plumbing record depths, unemployment up and real wages down—by 3% year-on-year in March, the most in more than a decade—demand remains fragile. Supermarket sales fell by 2.6% last month, compared with the previous one. Output will probably contract by at least 1% this year. Yet with prices rising at the fastest rate since 2003, the central bank’s rate-setters had little choice when they met on April 29th but to raise interest rates by another half a percentage point, to 13.25%.

If Brazil is fortunate, the painful rate hike could leave policy-makers with a bit more room to manoeuvre when they next convene in June. One source of inflationary pressure is easing: the real has rebounded by more than 10% against the dollar since its 12-year trough six weeks ago. This, notes Alberto Ramos of Goldman Sachs, an investment bank, mainly reflects the prospect that the Federal Reserve will keep its own rates rock-bottom for a while longer, given the recent underwhelming performance of the American economy. But it also illustrates the markets’ belief that the wily finance minister, Joaquim Levy, will manage to keep his pledge and turn a primary budget deficit (excluding interest payments)‎ of 0.6% in 2014 into a surplus of 1.2% this year.
This faith was shaken on April 30th, when official figures showed that in March the government managed to set aside a piffling 239m reais ($79m) to pay creditors; analysts had been expecting something closer to 5 billion reais. Meanwhile, the total public-sector deficit ballooned to 7.8% of GDP, inflated by a 34.5 billion reais monthly loss stemming from the central bank’s currency-swap programme. The economic slowdown also appears to be hurting the government’s tax take.

In contrast to the central bankers, then, Mr Levy’s life is getting harder. Making it more complicated still is a recent change to the way GDP is calculated. The new methodology, introduced earlier this year, brought Brazil into line with international standards (for instance by treating R&D spending as investment, not a cost). It gave output an arithmetical boost: in 2014 the economy’s size was 5.84 trillion reais, nearly 6% bigger than previously reckoned. Brazil’s ratio of gross government debt to GDP dipped, from 64% to 62%, thanks to a bigger denominator. The same logic, however, means that Mr Levy now needs to find an extra 3.8 billion reais in order to meet his primary-surplus promise.

With (modest) entitlement reform stuck in Congress, the axe has predictably fallen on investment: nearly 40% was lopped off the government’s flagship “Growth Acceleration Programme” of infrastructure works in the first quarter, compared with the same period last year. Such discretionary-spending cuts are easiest to administer. They are also the most detrimental to the Brazilian economy’s long-term health.