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Economist Calls Brazil’s Monetary Policy Inconsistent

Roberto Macedo, one of Brazil’s best-known economists and commentators, says the government’s inflation targeting system is not working as effectively in Brazil as in other countries, with the result that interest rates are too high to control inflation.

He describes the system as "naïve" and accuses the government of being inconsistent by extending credit at the same time as operating a tight monetary policy.

"This means that, on one hand, you’re holding the brake down with interest rates, but on the other you’re accelerating by expanding credit," he said.

In a wide-ranging interview with Brazil Political Comment, Macedo puts forward alternative ways of combating inflation and expresses optimism over the microeconomic area. He also explains why demographic changes will help narrow Brazil’s social gap in the medium term.

The interview is available in English and Portuguese at

You can also read John Fitzpatrick’s article "No Consistency in Brazil’s Foreign Policy" in which he describes how Brazil’s politicians have turned their backs on foreign affairs and left them in the hands of civil servants in Brasí­lia who have set their own agenda. Here is an excerpt:

"The reality .. is that Brazil’s foreign policy is a sham, established by bureaucrats, which combines anti-Americanism (sometimes strident, sometimes mild), anti-Europeanism in terms of trade but pro-European when Europe is against American interests, a phony friendship with "brother" Latin countries like Venezuela and Cuba, an uneasy rivalry with Argentina, an avuncular relationship with minnows like Paraguay, a  wishy-washy "solidarity" with poor countries in Africa, particularly Portuguese-speaking places, and closer links with some Middle Eastern countries but not Israel. 

"It is underpinned by an almost obsessive desire to become a permanent member of the UN Security Council and a distinct reluctance to see any kind of Pan-American free trade area which would be dominated by the US."


  • Show Comments (1)

  • Guest

    dead right !
    The article clearly defines Brazil inconsidtencies and unfairness.

    As an example they are totally against agricultural subsidies only when provided by developed nations BUT Brazil subsidies also heavily not only their own agriculture but equally many other industries. On top they provide export financings and tax creditx to exporters.

    This government provides trunked numbers. Just today the BNDES gave the results of all their 2005 loans, but not those provided to agribusiness and farmers.

    It is well know that most subsidied agricultural loans go to agribusiness and large landowners, not to small family farms.

    This government just lies through their teeth.

    As a small example, how can Reais 350 millions be enough to maintain and repair 26000 kms of roads filled with millions of portholes ?. And how can this be done in just 6 months ? furthermore the Transportation minister said his 2005 budget was US$ 2.5 billions, equivalent to over 5 billions Reais. Was it not possible to use 10 % to of the yearly budget for road repair and maintenance ?
    The problem is they lie too, because of the Reais 5 billions 2005 budget, only 1.2 billions were freed until October.- Doubtfull then that 3.8 billions were spent in just the last 2 months of 2005.

    Their obsession to become a permanent member of the UN security council is also quite strange are Brazil is not a world superpower, neither in military nor economically and nor politically. They just try to gather support in all part of the world without much success.

    Finally, the government wants brazilians to swallow erroneous fact.
    Not later than yesterday, your stupid and uneducated Minsuter Furlan, annouced that Brazil is now the world 5th exporter, not taking in account oil exporting countries.

    No doubt that in his mind he put the EU as one country.
    But the EU is not a country. It is an economic region like….the Mercosur !
    Furthermore it happens that at least half of the 25 countries export more than Brazil.
    Even little Switzerland, with 7 millions citizens, and not a EU member, exported US$ 130 billions in 2004. This exceeds even the 2005 Brazilian exports.
    Obviously there are many other countries in the world, not oil exporters, that export far more than Brazil.
    This shows the total incomptency of this government. They just dont know what they are talking about.

    On their public speeches congratulating themselves for their achievements they also often give numbers in US$ while they should be in Reais. Guess why !!!!!

    And as a funny thing, with all the corruption in this government, the UN gave them US$ 3 millions to help fight the corruption.

    Whoaaaa…..Great !

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