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MNI INTERVIEW: Brazil Risks Fiscal Dominance-Ex BCB Deputy

Central Bank of Brazil former deputy governor for economic policy Sergio Werlang speaks to MNI in an interview.

MNI (BRASILIA) - The Central Bank of Brazil is likely to hike by another 50 basis points at its next meeting in December, but an over-expansionary fiscal environment could mean that rate rises will soon be insufficient to quell inflation, the BCB’s former deputy governor for economic policy Sergio Werlang told MNI.

"Copom might continue raising rates, probably by another 50bp at the next meeting, but I believe that at some point, especially with the new board composition next year, someone on the board might start to question its effectiveness. Because I believe that even with a significant increase, the BCB wouldn’t be able to bring inflation to target," Werlang, now a professor at Fundacao Getulio Vargas, said in an interview.

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MNI (BRASILIA) - The Central Bank of Brazil is likely to hike by another 50 basis points at its next meeting in December, but an over-expansionary fiscal environment could mean that rate rises will soon be insufficient to quell inflation, the BCB’s former deputy governor for economic policy Sergio Werlang told MNI.

"Copom might continue raising rates, probably by another 50bp at the next meeting, but I believe that at some point, especially with the new board composition next year, someone on the board might start to question its effectiveness. Because I believe that even with a significant increase, the BCB wouldn’t be able to bring inflation to target," Werlang, now a professor at Fundacao Getulio Vargas, said in an interview.

Keep reading...Show less