Brazil's Central Bank Chief Highlights Fiscal Concerns Amid Monetary Policy Discussions

Roberto Campos Neto, Brazil's central bank chief, emphasizes the rising challenge of discussing monetary policy without addressing fiscal issues. Citing the permanent expansion of income transfer programs, he stresses the need to better communicate resource misallocation and monitor inflation factors. Campos Neto also mentions the potential impacts of China's economic deceleration on Brazil.

Brazil's central bank chief highlighted the rising challenge of discussing monetary policy without addressing fiscal issues. Roberto Campos Neto cited expanding income transfer programs and the growing public debt burden as critical factors.

Speaking at the Kansas City Federal Reserve's annual economic conference, Campos Neto emphasized the permanence of pandemic-era income transfer programs and stressed the need for an accurate strategy to understand their efficiency. He called for better communication on resource misallocation.

In July, Brazilian policymakers kept the Selic benchmark interest rate at 10.5%. Campos Neto warned about recent volatility and its implications for future fiscal and monetary intervention. He also addressed potential impacts of China's economic slowdown on Brazil's economy.

(With inputs from agencies.)