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Brazil central bank monitoring impact of Iran-US conflict

Brazil central bank monitoring impact of Iran-US conflict

BRASILIA: Brazil’s central bank chief, Roberto Campos, said that policymakers are monitoring tensions between Iran and the United States to understand how they may affect inflation forecasts, and cited recent sharp swings in commodity prices.

He noted oil prices rose in the first day of the conflict, but were again trading below levels seen before the killing in a US drone attack of powerful Iranian general Qassem Soleimani in Baghdad on Jan. 3.

“It is important to look at the impact of the conflict on macroeconomic variables, as we understand that these variables influence our forecasts,” Campos said at a news conference on the economic agenda.

“Two elements have showed great volatility: oil and beef. For the central bank it is important to know how this affects inflation,” he added.

Campos also highlighted a favorable legislative environment for the approval of a bill granting the central bank formal autonomy in the first quarter of 2020.

“I have been talking to the lower house speaker Rodrigo Maia, who has been defending the economic agenda,” he said, adding the lower house bill on central bank autonomy seems better than the one in the Senate.

Campos also expects Brazil’s Congress to make progress on another bill to reform the foreign exchange market in the first three months of this year.

The central bank still plans to launch a new “benchmark” for currency reserves in the first quarter, he said. Central bank director Bruno Serra said similar policy adjustments for currency reserves were made a few times in recent years, without disclosure.