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Brazil, currency depreciation does not raise prices, room for further rate cuts = central bank governor

2019-10-21T02:04:39.069Z


[Reuters, Washington 18]-President Roberto Campos Neto of the Brazilian Central Bank on the 18th, the recent depreciation of the currency against the dollar has not led to price increases, and there is room for further reduction in policy interest rates


[Reuters, Washington, 18]-President Roberto Campos Neto of the Central Bank of Brazil sees the recent fall of the real currency against the dollar as a result of not raising prices and leaving room for further reduction in policy interest rates. Indicated.

Mr. Campos Neto, who met in Washington to attend the International Monetary Fund (IMF) Annual Meeting, explained that Brazil has adopted a floating exchange rate system and that the central bank will only intervene when market liquidity is tight. did.

Prior to this, Campos Neto reportedly reported that the central bank might intervene if a large amount of money flows into the foreign exchange market through the sale of Brazilian state-owned assets.

When asked about this statement, he stressed that such interventions would not be implemented unless the market function was compromised. “We always say that there is a liquidity gap, that is, the central bank intervenes when the market breaks down,” he said.

The central bank last month cut the policy interest rate to a record low of 5.50%, and also suggested the possibility of further interest rate cuts due to rising uncertainty in the global economy and price stability.

Real's exchange rate against the US dollar has been soft at around 4 real, but even economic growth, high unemployment, and a substantial gap between supply and demand will make the price increase rate this year and next year much lower than the government target. Analysts say that additional rate cuts will definitely be needed to stay.

Campos Neto pointed out that Brazil's confidence has increased, offsetting the blow of Real. He added that Brazil's risk premium has fallen even if the real decline.

Source: asahi

All news articles on 2019-10-21

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