Brazil and the new government: risks and uncertainties of economic policy


  • Liliana Lavoratti


At a roundtable, “Brazil and the New Government,” last November economists from the Brazilian Institute of Economics (IBRE) were markedly more optimistic about what lies ahead for Brazil than those representing private companies. The former tend to be more convinced that the new government is not likely to cause any major disruptions in current economic policy, although they do recognize that there are risks related to how consistent fiscal and monetary policies to control inflation will be, and that the Central Bank will continue to have the autonomy to raise the benchmark interest rate, if necessary. The latter believe it will take more than tightening fiscal policy to bring inflation down, and the Central Bank is not concerned enough about interest rates. They tend to be of the opinion that a rise in interest rates will be critical to manage the expectations of economic agents and avoid losing control of inflation. Liliana Lavoratti details the arguments made at the roundtable.






IBRE Economic Outlook