Brazil Central Bank Tombini
Sees Risk in Capital Inflows
Brazilian Central Bank Alexandre Tombini said the bank is “proactive” to prevent increased capital flows to affect the country’s financial stability. He spoke in New York at a conference sponsored by the Brazilian American Chamber of Commerce and the Americas Society.
Tombini defended the bank’s measures to moderate foreign investments, as necessary steps to prevent a destabilizing rush from investors seeking to take advantage of Brazil’s high interest rates.
He said that inflation, which in June reached 6.71 percent in a 12-month period, was within the bank’s estimates and a consequence of high agricultural commodity prices, global liquidity and distortions in asset prices, among other factors.
Tombini expects the impact of recent policy adjustments to achieve full force later in this quarter and in the fourth quarter, as such measures operate “in lags.”
Under Tombini, Brazil’s central bank has raised rates four times so far this year, an 150 points increase, to 12.25 percent.
Brazil also announced new measures for the foreign exchange market, such as a new deposit of 60 percent of the value of any short-dollar position that banks may exercise over a total of $1 billion per bank.
Tombini was nominated by President Dilma Rousseff last year, to succeed long-term Central Bank President Henrique Meirelles. He’s been with the bank since 2006.