Central Banks are “Sleeping At the Driving Wheel,” Says Brazil’s Economic Minister

Paulo Guedes minister of economy Brazil
Paulo Guedes minister of economy Brazil

The Economy Minister of Brazil has warned Friday that Western central bankers are “sleeping at the driving wheel” as economies slip deeper into a high inflation environment.

Paulo Guedes spoke to CNBC’s Geoff Cutmore via a videoconference at the Davos Agenda virtual event. The minister said that the inflation “beast” is causing real problems. 

“My fear is that the beast is out of the bottle,” Guedes told the panel.

“I think the central banks are sleeping at the driving wheel. They should be aware, and I think inflation will be a problem, a real problem very soon for the Western world,” he said.

Guedes added that inflation could be a long-term issue for western governments, and this dilemma is far from being transitory as some central banks suggested. 

“I don’t think inflation will be transitory at all,” he said. “I think these supply adverse shocks will fade away gradually, but there’s no arbitrage anymore to be exploited by the Western sides.”

Meanwhile, Brazil has curbed inflationary pressures by gradually drawing down its Covid Stimulus packages last year, he said.