January 24, 2013 / 11:06 AM / in 5 years

Brazil's Tombini defends stance on inflation, policy -press

* C.Bank head says is committed to tackling high inflation

* Sees consumer price inflation down to 4.5 pct by year-end

* Says Brazil has not abandoned econ policy cornerstones

* Central bank had no immediate comment on press reports

SAO PAULO, Jan 24 (Reuters) - Brazil’s central bank is committed to bringing down inflation, its president was quoted as saying on Thursday as he defended the government against criticism it had abandoned cornerstones of its economic policy.

Policymakers were not ruling out the use of traditional monetary tools to contain rising consumer prices, Alexandre Tombini was quoted by several newspapers as saying.

“The central bank remains vigilant and will do what it has to do to handle monetary policy in Brazil. We will control inflation, as has been the case over the past nine years,” Valor Economico quoted Tombini as telling an audience at the World Economic Forum in Davos, Switzerland.

He reiterated the central bank is committed to bringing inflation down to 4.5 percent this year. In the 12 months to mid-January, it accelerated to 6.02 percent from 5.78 percent one month before - putting it near the top of the bank’s target range of 4.5 percent plus or minus 2 percentage points.

Calls to the central bank’s media office in Brasilia to confirm Tombini’s comments were not returned.

Tombini defended the administration of President Dilma Rousseff from criticism that the government has abandoned the “macroeconomic tripod” that helped usher in stability and growth during the past decade, O Estado de S. Paulo reported.

The tripod is a combination of policies aiming at preserving the nation’s floating foreign exchange regime, budget discipline and low inflation.

Confidence in Latin America’s largest economy has taken a hit in recent months and many investors ran for the exits after Rousseff put pressure on banks, mobile carriers and power utilities to cut prices, the government used accounting gimmicks to meet its annual budget targets and inflation fell down its list of priorities.

Investors said the government campaign, while well-intentioned, has stirred doubts about Rousseff’s willingness to respect contracts and ensure the economy grows in a sustainable way.

Tombini also defended Rousseff’s decision to protect certain industries deemed as strategic from the impact of a weaker dollar globally, Valor reported.

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