Economy
Brazil may tweak inflation target time frame in CMN meeting
© Reuters. FILE PHOTO: People walk in front of a store on a commercial street in downtown Sao Paulo December 4, 2014. REUTERS/Paulo Whitaker/File Photo
By Marcela Ayres
BRASILIA (Reuters) – Brazil’s National Monetary Council (CMN), the country’s top economic policy body, will meet on Thursday to set its 2026 inflation target, with all eyes on whether it will tweak the time frame now used to assess the goal’s fulfillment.
Currently, the CMN sets annual inflation targets that must be met each calendar year. However, Finance Minister Fernando Haddad has said he favors pursuing inflation targets within a “continuous” time frame, arguing a longer-term approach provides more room to accommodate price shocks without requiring monetary tightening.
The CMN comprises the finance minister, planning minister and the central bank governor, giving the federal government two out of three votes on one of thorniest economic policy debates in Latin America’s largest nation.
President Luiz Inacio Lula da Silva has often criticized the independent central bank for keeping interest rates at 13.75% despite a steep decline in inflation. He has also called for higher inflation targets to enable monetary policy easing. Those appeals, which he has not made for a few months, had served to worsen expectations for inflation.
Although the CMN is expected to maintain a 2026 inflation target of 3%, there is a growing belief it may ditch annual targets in favor of the longer-term models favored by Haddad.
The central bank currently targets inflation of 3.25% in 2023 and 3% in 2024 and 2025, with a tolerance margin of 1.5 percentage points up or down.
This compares with inflation of 3.4% in the 12 months through mid-June and private economists’ expectations of inflation reaching 5.06% this year, 3.98% in 2024, 3.80% in 2025, and 3.72% in 2026.
In the minutes from its latest policy decision, the central bank said that most policymakers see room for cautious monetary easing in August if an improved scenario for inflation materializes, signaling that maintaining the inflation target at 3% for the coming years would be important for this purpose.
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.
The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.
Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.
“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.
Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.
“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.
The bank will next convene to set its benchmark rate on Feb. 16.
The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.
© Reuters. FILE PHOTO: Workers walk past an under-construction area with completed office towers in the background, in Shenzhen’s Qianhai new district, Guangdong province, China August 25, 2023. REUTERS/David Kirton/File Photo
SHANGHAI (Reuters) – China’s top planning body said on Saturday it had identified a second batch of public investment projects, including flood control and disaster relief programmes, under a bond issuance and investment plan announced in October to boost the economy.
With the latest tranche, China has now earmarked more than 800 billion yuan of its 1 trillion yuan ($140 billion) in additional government bond issuance in the fourth quarter, as it focuses on fiscal steps to shore up the flagging economy.
The National Development and Reform Commission (NDRC) said in a statement on Saturday it had identified 9,600 projects with planned investment of more than 560 billion yuan.
China’s economy, the world’s second largest, is struggling to regain its footing post-COVID-19 as policymakers grapple with tepid consumer demand, weak exports, falling foreign investment and a deepening real estate crisis.
The 1 trillion yuan in additional bond issuance will widen China’s 2023 budget deficit ratio to around 3.8 percent from 3 percent, the state-run Xinhua news agency has said.
“Construction of the projects will improve China’s flood control system, emergency response mechanism and disaster relief capabilities, and better protect people’s lives and property, so it is very significant,” the NDRC said.
The agency said it will coordinate with other government bodies to make sure that funds are allocated speedily for investment and that high standards of quality are maintained in project construction.
($1 = 7.1315 renminbi)
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.
The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.
Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.
“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.
Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.
“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.
The bank will next convene to set its benchmark rate on Feb. 16.
The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.
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