BRASILIA, Sept 21 (Reuters) - Neutral interest rates in Brazil are set to drop from 5 percent to 4 percent by 2022, economists said in a central bank survey on Thursday, suggesting policymakers should need smaller doses of monetary tightening in the future to control inflation.
The survey of 82 economists, conducted in April but published only on Thursday in the bank’s quarterly inflation report, sheds light on an important but elusive piece of monetary policy information - the level at which interest rates neither fuel nor curb inflation.
Interest rates discounted for inflation are currently around 3 percent, below the neutral level as estimated by economists, the central bank said in the report. That means monetary policy is now stimulating economic growth as Brazil recovers from two years of its worst-ever recession.
The central bank has refrained from publishing its own estimate for neutral interest rates, also called structural rates, because of the high degree of uncertainty of such estimates, central bank director Carlos Viana told journalists as he commented on the report.
Viana reiterated that the bank expects neutral interest rates to drop further in coming years after changes to subsidized lending were approved in Congress this month.
He said, though, that there has probably not been an immediate impact over the perceived level of neutral interest rates.
“It will depend on how people will behave in this new environment, how credit markets will adapt,” Viana said. “But there is too much uncertainty about the velocity and the intensity (of this potential drop).” (Reporting by Silvio Cascione, editing by Marcy Nicholson)