Brazil’s economy briefly returned to pre-pandemic levels in 2021 before slipping lower again.
“We took advantage of the recovery to remove, gradually, the monetary and fiscal [stimulus],” Guedes said, adding that the government has room to react should another coronavirus wave emerge.
Guedes’ comments contrast with those central bankers who argue that current levels of inflation are, indeed, transitory and containable.
Also speaking at The Davos Agenda Friday, European Central Bank President Christine Lagarde said inflation in the euro area was unlikely to worsen dramatically, arguing that the recent surge was due to short-term pressures such as supply bottlenecks and energy prices.
Meantime, U.S. Federal Reserve Chair Jerome Powell is widely expected to hike interest rates at the central bank’s next meeting in a bid to stem rising inflation. It follows similar moves by the Bank of England in December.
