IMF Says Brazil Should Prepare to Stretch Aid and Stimulate the Economy

Institution also stated that Central Bank should consider further interest rate cut

The end of economic stimuli, such as emergency aid, and the persistence of the new coronavirus pandemic, which encourages social isolation, will reduce household consumption and affect Brazil's economic recovery.

The restriction scenario appears in a report on Brazil, released on Wednesday (2), by the IMF (International Monetary Fund).

Brazil's Central Bank Foto: Charles Sholl/Raw Image - RAW IMAGE

In the Fund's assessment, the country will suffer from an abrupt withdrawal of the government's economic stimulus measures, since the effects of the health crisis generated by the pandemic persist.

In the report, the institution states that the authorities must be prepared to provide additional tax area support. The institution had already made warnings to that effect in its latest documents.

He also said that the Central Bank should consider loosening monetary policy even further, that is, assessing further cuts in the basic interest rate if inflation and inflation expectations remain below the target, but with careful monitoring of the implications for stability financial and capital flows. Currently, the basic interest rate in Brazil, the Selic, is at 2% per year.

Translated by Kiratiana Freelon

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