In an interview with CNN this Thursday (16th), President Luiz Inácio Lula da Silva defended that the heated demand in the country is not the main reason for the high prices and that, therefore, interest rates should not be maintained at such high levels.
According to the president, “increasing interest rates is important when you have demand inflation, if you have a society consuming too much, then you increase interest rates to reduce consumption, but this is not the case in Brazil”.
For the former director of economic policy at the Central Bank Fabio Kanczuk, who is now head of macroeconomics at ASA Investments, this discourse is wrong.
“Brazil does have demand inflation. And there’s no way around it, with demand inflation, you have to raise interest rates, the economy has to slow down a lot to bring inflation back to a reasonable level”, he told the CNN this Friday (17).
The economist explains that those who defend the opposite, as did Lula and other economists linked to the Workers’ Party, are confused by what happened at the beginning of the pandemic crisis.
“In 2020 and 2021 there was a question about supply problems caused by bottlenecks in production chains. At that time, there was a lack of chips, for example, which raised the price of cars. But that discussion ended a reasonable time ago, and now everyone knows that we are experiencing demand inflation”, he says.
*Interview produced by Larissa Coelho, from CNN / text published by Ligia Tuon
Source: CNN Brasil
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