BRASILIA, May 5 (Reuters) – Brazil’s finance minister Dario Durigan said the government’s relaunched consumer debt relief program won’t provide enough stimulus to derail the current monetary easing cycle.
“(The impact) seems quite contained,” Durigan said in an interview with TV program Roda Viva late on Monday.
The government relaunched on Monday a consumer debt relief program first introduced in 2023, aiming to reduce interest burdens and boost disposable income ahead of President Luiz Inacio Lula da Silva’s re-election bid in October.
“Is the fiscal picture pressuring monetary policy today? No, it is the war,” he said, referring to the U.S.-Israeli against Iran, which has pushed up oil prices.
The Brazilian central bank cut its benchmark interest rate for a second straight meeting by 25 basis points last week, to 14.5%, after a prolonged period of ultra-restrictive policy aimed at bringing inflation – currently at 4.37% – down to the official 3% target.
Asked about a potential change to the inflation goal, Durigan said he opposes altering it.
Durigan also said mandatory spending – whose rapid growth has been a hallmark of Lula’s leftist administration – needs to be curbed over time, suggesting that one possible avenue would be revisiting parameters of the country’s fiscal framework approved in 2023.
The framework passed by Lula combines primary budget balance targets with a cap limiting spending growth to up to 2.5% above inflation.
Durigan also cited limits on transfers from the federal government to the Federal District government as a measure that needs to be implemented.
(Reporting by Marcela Ayres; Editing by Susan Fenton)
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