IMF Recommends Brazil Keep Rates High, Post Budget Surplus
- Brazil should post primary budget surpluses of 3.5% of GDP
- Monetary policy should be tight until inflation outlook falls
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The International Monetary Fund made tough policy recommendations for Brazil on Thursday, suggesting that monetary policy remain tight until inflation expectations more clearly approach the official target, and that the government start aiming for strong primary budget surpluses.
Brazil’s current monetary policy settings are “broadly appropriate given inflation expectations,” the fund said at the conclusion of its so-called Article IV mission. The multinational lender said the government should front-load its fiscal consolidation, and suggested a “possible objective” of reaching a primary budget surplus of 3.5 percent of gross domestic product over the coming half-decade.