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The Future of Monetary Policy in Brazil
Recommendations for Alexandre Tombini - Henrique Meirelles-
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Sovereign Monetary Policy
Fixed Exchange Rate Free Capital Movement Sovereign Monetary Policy
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Interest Groups A lot of pressure. Export-oriented industries, want a weaker currency. Left-side of political spectrum– want more growth.
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New Administration (Left-leaning)
Favor expansionist policy Encourage growth Desire to cut unemployment Cut interest rates Left-leaning governments what expansionary policy. Means cutting rates, cutting unemployment, encouraging growth .
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Do not bend to political or interest group pressure
Recommendations Do not bend to political or interest group pressure Raise interest rates Stay independent as possible. Seek long term goals. What’s best for economy, not particular groups.
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Economy Since 2008 Government has been on a spending binge to prevent a collapse. Lending to private institutions to make sure that credit flowed. Other emerging economies are also going to face.
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Combat inflation and make sure economy doesn’t overheat.
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Questions?
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