Guedes says Brazil is experiencing a “bitter taste” of higher interest rates

On Thursday, the 24th, Economy Minister Paulo Guedes said that Brazil is experiencing a “bitter taste” of higher interest rates to fight inflation. But he reiterated the assessment that other central banks of the world are “sleeping at the wheel”, arguing that the country will be one of the first to reduce price hikes.

“We are testing the bitter taste for this kind of policy,” Guedes said while participating in the conference of the Brazilian Association of Real Estate Developers (Abrainc).

He considered that inflation is a global movement that should take time to dissipate. “It came by force and did not come to disappear quickly.”

During the event, Geddes also highlighted what he sees as an improvement in the government’s financial fundamentals, with increased revenue allowing for tax cuts. With regard to the International Investment Institute, he added that the tax reduction will be increased to 33% after the 25% reduction announced at the end of last month.

The minister stressed that within 15 months, the government was able to eliminate the primary deficit in public accounts, which was previously at 10% of GDP as a result of the spending explosion in the shadow of the pandemic. “We have not allowed populist governments to use the pandemic to make unnecessary expenditures,” the economist recalls, adding that Brazil is “prepared to move forward.”

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