DAVOS-Brazil’s cenbank chief says economy out of crisis

DAVOS, Switzerland, Jan 30 (BestGrowthStock) – Brazil’s economy is
returning to normal and no longer needs so much fiscal stimulus,
Central Bank President Henrique Meirelles said on Saturday.

Meirelles told Reuters the government’s plan to phase out
tax cuts and tax breaks introduced to combat a recession in
Latin America’s biggest economy was appropriate.

“I think it’s a proper move, the Brazilian economy is now
out of the crisis,” he said on the sidelines of the World
Economic Forum in Davos.

“We are going to a situation which is business as usual and
I think this is a proper moment to withdraw fiscal stimulus.”

Brazil exited a six-month recession last year ahead of many
more developed economies. The country’s benchmark Bovespa stock
index (.BVSP: ) surged 83 percent in 2009, while its currency, the
real (BRBY: ), strengthened 34 percent.

Meirelles said the central bank was considering whether to
increase the level of reserves banks must keep, a step which
would reduce the amount of liquidity available.

The central bank lowered the reserves level during the
crisis, a change which is due to expire at the end of March.

Options under consideration are keeping reserves at their
current lower rate, returning to the pre-crisis level or even
increasing the levels further, Meirelles said.

“There (is) no commitment one way or the other, going back
to the old level, keeping the present level, increasing somewhat
— there is no commitment and we will analyse that in due time.”

The central bank kept its benchmark interest rate
(BRCBMP=ECI: ) steady at its record low of 8.75 percent on Jan. 27
in a unanimous decision, but left the door open for a rate hike
in coming months.

The January statement from policymakers omitted previous
references to the remaining factory capacity gap and a benign
inflation scenario, fuelling speculation it may raise rates as
early as March. [ID:nN27188952]

Strong commodity price rises and expectations of 5 percent
or more economic growth this year are fanning fears of upward
inflation pressure, although Finance Minister Guido Mantega said
on Friday he saw no inflation risks. [ID:nN29162223]

Meirelles said he was not yet ready to make a decision about
his own future at the central bank, amid speculation he may run
for political office.

“As a disciplined central banker I take decisions at the
right time,” he said, and this was by the end of March.

Asked if he would like to be vice-president under Dilma
Roussef, chief of staff to current president Luiz Inacio Lula da
Silva, he said: “I am honoured by this kind (mention) of my name
but I am not working towards that end.”

Brazil’s longest-serving central bank president has
repeatedly said he is considering running for public office and
joined the centrist PMDB party last September to keep that
option open.

Stock Trading
(Reporting by Krista Hughes and Clara Ferreira Marques, editing
by Mike Peacock)

DAVOS-Brazil’s cenbank chief says economy out of crisis