São Paulo – The president of the Brazilian Central Bank, Henrique Meirelles, said this Friday (13th) that Brazil is now internationally regarded as a model in crisis management, partly due to the policy adopted by the Central Bank, the institution in charge of maintaining financial stability.
"Brazil’s performance during the crisis was one of the world’s best and most effective. We had the shortest recession of all countries; we exited it in only five months. Thus, because of its results and technical efficacy, the crisis management model adopted by the Central Bank is regarded as a model not only by other central banks, but also by a report of the International Monetary Fund," said Meirelles at the open of the 5th Seminar on Risk, Financial Stability and Banking Economy, in São Paulo.
After saying that the Central Bank faces the challenge of constantly improving the announcement of its decisions, so as to make the financial system increasingly transparent, Meirelles replied to criticism that the institution supposedly induced market analysts to err in their forecasts of the results of the last meeting of the Monetary Policy Committee (Copom). On the occasion, the benchmark interest rate (Selic) increased by 0.5% and reached 10.75% per year, whereas based on a minute issued by the Copom and on the Inflation Report issued a few days earlier by the Central Bank, specialists were betting on a 0.75% increase.
"There was a misunderstanding on the part of many analysts," claimed Meirelles, according to whom the episode had a positive aspect, because it enabled people to understand how the bank’s governance rules work. "Although it often seems to be clear to many, some issues are not clear to all. Such is the case with the so-called signalling that took place at the Copom’s last meeting," he said.
"The inflation targeting system aims to coordinate inflation expectations, not the next meeting of the Copom, whose decision must take into account both the inflation expectation and the actual measured inflation. It is useful and desirable for the highest possible number of analysts to be able to predict the result of the next meeting, and we will continue working for that to take place. Hopefully, who knows, the world economy and the Brazilian economy will return to a level of stability in which it will be completely predictable, but this is not the case with the world economy nowadays," added Meirelles.
The president of the Central Bank also claimed that debate over the institution’s autonomy during the pre-election period is good, because it puts the institution on the spotlight.
*Translated by Gabriel Pomerancblum
