SAO PAULO (Reuters) -Brazil’s government believes the economy is starting to feel the effects of high interest rates and will closely monitor data to see if those impacts are “wider than initially expected,” Economic Policy Secretary Guilherme Mello said on Friday.
Brazil’s central bank last week held its benchmark rate at 15%, the highest in almost two decades, pausing an aggressive tightening cycle after seven consecutive hikes aimed at fighting sticky inflation, which should cool down economic activity.
“Monetary policy is having the expected impact, perhaps even sooner than expected,” Mello told an event hosted by news outlet JOTA, though adding the government for now continues to see growth this year close to 2.5%.
(Reporting by Isabel Teles, Editing by Franklin Paul)