SAO PAULO/BRASILIA, June 18 (Reuters) – Brazil’s Finance Minister Dario Durigan said on Thursday that there was still room for further interest rate cuts in Brazil, but emphasized that it was the central bank’s prerogative.
Brazil’s central bank on Wednesday cut rates at a third straight meeting to 14.25% and left its next steps open, despite acknowledging a worsening inflation outlook, with higher projections and rising upside risks to consumer prices.
Durigan said that the government has been working to contain inflation and was blocking 23 billion reais ($4.51 billion) in the budget to signal fiscal tightening that should help with monetary policy.
He also said that while he has previously backed reviewing the methodology used to calculate inflation to better reflect current household spending patterns, he respected the existing readings.
Durigan said he has never proposed changing the index simply because it is rising, noting he only supported studies aimed at modernizing the methodology.
Annual inflation in Brazil accelerated to 4.72% in May, above the central bank’s 3% target. On Wednesday, the central bank projected inflation will rise further to 5.2% for the full year.
($1 = 5.1052 reais)
(Reporting by Isabel Teles and Marcela Ayres; editing by Philippa Fletcher and Tomasz Janowski)
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