Brazilian President Luiz Inacio Lula da Silva said the country’s inflation targets are too strict and renewed criticism of the central bank for high interest rates ahead of a meeting that will set inflation targets for 2026.
Lula’s comments came as financial markets closely watched the National Monetary Council meeting later in the day for possible changes to the targets, which currently stand at 3.25% for 2023 and 3% for the next two years.
“Personally, I think Brazil should not have such a strict inflation target if it cannot achieve it, But it is not wise for me to talk about the Monetary Council before it meets.” Lula said in an interview with Radio Gaucha.
The council is made up of the finance minister, planning minister and central bank governor, giving the federal government two out of three votes in one of the thorniest debates over economic policy in Latin America’s largest country.
Lula had earlier hinted at the possibility of changing inflation targets to increase them and enable monetary policy easing, a move that has exacerbated expectations about consumer price changes.
CMN is expected to maintain its 3% inflation target for 2026, but there is growing belief that it may adjust the timeframe used to assess achievement of the target, abandoning the calendar proposed by Finance Minister Fernando Haddad.
Brazilian President Luiz Inacio also renewed his criticism of the central bank for keeping benchmark interest rates at 13.75%, a level he considers an impediment to economic growth.
