The president of the Central Bank (BC), Roberto Campos Neto, said today (22), that the tax reduction “structurally” does not help to reduce inflation. The topic came up in front of the announcement by the Minister of Economy, Paulo Guedes, which the government is considering reducing by up to 25% the rate of the Tax on Industrialized Products (IPI), a federal tax levied on industrialized articles, national or imported, for sale in the country. Guedes participated in the same event, a seminar held by the bank BTG Pactual, in the city of São Paulo, in the morning.
“You lower a tax or do something that gives up revenue to get a lower product price at that moment, structurally you are not helping inflation. You may have a drop in the short term, but in terms of inflation expectations, this will be incorporated and this element tends to prevail structurally, speaking in the medium and long term”, he declared when asked about the topic. He highlighted that this analysis takes into account not only Brazil, but other countries that have adopted similar measures, such as Colombia.
Still on inflation, the BC president said that he projects an acceleration of the fall in inflation in the first half of the year. “When we look at 12 months, between April and May, this is our view,” he said. Campos Neto rejected the idea that he had said that these would be the peak months. According to the Brazilian Institute of Geography and Statistics (IBGE), in the last 12 months, the Broad Consumer Price Index (IPCA) has increased by 10.38%, a level higher than the 10.06% recorded in the period immediately preceding.
Campos Neto said that the BC analyzes inflation in the service sector. “It went up faster and was more widespread, and industrial inflation didn’t go down and, in part, it increased until diffusion,” he said. He credits part of this inflationary movement to the energy chain.
Regarding the service sector, the president of the Central Bank said that he seeks to understand what may have led to the increase in prices. “We tried to see what the recomposition of the margin was, what there was in terms of salary. We are looking at service inflation more closely. We already expected her to go up. The last number surprised us negatively,” he said.
cryptocurrencies
The president of the Central Bank also commented on the approval by the Senate of the bill that seeks to regulate the cryptocurrency market in Brazil. Today, the Senate Committee on Economic Affairs (CAE) approved, in a final character, the proposal that recognizes and regulates the market in the country. If there is no recourse for a vote in plenary, the text may go straight to the Chamber of Deputies.
“Do you have any other PL [projeto de lei] in the Chamber, but we understand that there may be some form of project joining. This project is important, it is a first project, which talks about brokerages”, he said, considering the approval positive. He recalled that the topic dominated a large part of a recent meeting with central banks from several countries. “I see a certain concern, but I also see new doors opening for financial innovation, for a decentralized system that is capable of generating inclusion, so we need to put everything in perspective.”
