February 18, 2014, 10:07 pm
Brazil’s central bank chief Alexandre Tombini has told reporters that the government’s approach to reducing inflation, and the increase of interest rates since last April, appear to be working.
He said that Brazil’s economy is resilient in the face of global economic changes, particularly the volatility in currency markets.
Brazil, like other BRICS and emerging economies, has used its foreign reserves to shore up its falling currency – the real – as foreign capital continued to flow out of the country.
“We are happy with the kind of situation we have now as far as broad financial stability is concerned…. The floating of the real has helped insulate the economy… under these new global financial conditions,” he told AFP.
“We are doing our homework, fighting inflation, and to a larger extent we have been successful.”
Tombini also indicated that worries over tapering of the stimulus programme by the US Federal Reserve may be overblown.
He said the decisions to cut the $85-billion fund (now down to $65 billion) reveal that there is faith in the strengthening of the US economy.
Brazil’s economy, which appeared wobbly last year, appears to be stabilizing.
In early January, Brazilian Finance Minister Guido Mantega said that the government had beat its primary surplus target in 2013, and managed to keep spending under control.
“We will continue with the fiscal effort to control expenses. We will have a good fiscal result in 2014,” Mantega said at the time.
His statements came on the heels of HSBC’s Purchasing Managers’ Index survey which showed that manufacturing activity in Brazil had moved from contraction to expansion.
While only a small difference – from 49.7 in November to 50.5 in December, the positive change could allay the business sector’s worries about the stability of the Brazilian economy.