MNI BRIEF: Market Reaction On Fiscal 'Exaggerated'-BCB Campos
MNI (BRASILIA) - Central Bank of Brazil Governor Roberto Campos Neto said Tuesday the risk premium on the interest rate curve reflects concerns about fiscal matters, particularly regarding the transparency of the government's numbers, but he considers the recent move "exaggerated."
"We don’t want to risk stating how much, but we understand that there will indeed be a slowdown in government spending. This is already reflected in our projections," he highlighted at an event sponsored by Safra Bank.
"More recently, there has been what we might call a risk premium that comes not from the trajectory or the amount of spending, but rather from the transparency regarding the numbers. We believe that, looking at market prices, there seems to be an exaggeration regarding what has been done, but we are monitoring it, as it is important for our reaction function," he added. (See MNI INTERVIEW: BCB To Step Up Hiking Pace In Nov.-Figueiredo)