Alexandre Tombini, the governor of Brazil’s central bank, said before the Brazilian Senate Committee on Economic Affairs on Tuesday that the bank will continue to work to bring inflation down to its target of 4.5 percent.
Brazil currently has an inflation rate of 5.77 percent, though it allows for up to 6.5 percent.
Tombini pointed to a downward trend in inflation between June and November and said the central bank has raised the Selic rate from 7.25 percent in April to the current goal of 10 percent. He said there is “some uncertainty” as to how the policy will affect inflation and added that the uncertainty could become even greater.
“The volatility of financial markets has been magnified by the steep slope of the yield curves in mature economies, particularly in the U.S.,” Tombini said.
Tombini said that, with some adjustments, the central bank will continue its foreign exchange hedging program, which allows dollar-indebted companies to hedge against currency fluctuations, into 2014.
He said future growth will rely on building confidence among Brazilian households and entrepreneurs, saying the level of interest from foreign investors in recent public services auctions proves the attractiveness of the Brazilian economy.