Brazil central banker says Bolsonaro agenda supports investor hopes

Brazil's Central Bank President Ilan Goldfajn speaks during an interview with Reuters in Brasilia
Brazil’s Central Bank President Ilan Goldfajn speaks during an interview with Reuters in Brasilia, Brazil January 22, 2019. REUTERS/Ueslei Marcelino

January 22, 2019

By Jamie McGeever and Marcela Ayres

BRASILIA (Reuters) – The global economic outlook has deteriorated and remains risky, but investor confidence in Brazil is justified by the reform agenda proposed by the incoming government, Central Bank Governor Ilan Goldfajn told Reuters on Tuesday.

President Jair Bolsonaro’s pledges to tackle corruption, overhaul the country’s pension system and privatize state firms should help support medium- to long-term growth despite the international challenges, Goldfajn said.

“The signs coming from the new government are encouraging,” he told Reuters in an interview at the Brazilian central bank in the capital Brasilia. “These are things that please investors.”

Goldfajn, whose term will end in March, said the execution of Bolsonaro’s economic agenda, including pension reform, will be crucial to keeping interest rates and inflation near current lows.

The central bank been justified in keeping the benchmark Selic rate at an all-time low of 6.5 percent since March 2018, he said, despite the local currency’s slide last year.

“The central bank’s objective is inflation, not any particular asset price or exchange rate,” Goldfajn said.

“Monetary policy always has to be conducted with a calm perspective, cautiously, confidently, and with focus. We kept that serenity (last year) and we’re doing it now too,” he said.

Annual inflation is running at 3.75 percent, below the central bank’s target of 4.25 percent for this year.

“We believe monetary policy is stimulative. Whether it is sufficiently so, we will always look at the right moment,” he said.

(Reporting by Jamie McGeever and Marcela Ayres; Editing by Brad Haynes and Bernadette Baum)

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