RIO DE JANEIRO, May 15 (Reuters) - Brazil's central bank president Henrique Meirelles said on Friday some 'fine-tuning' to the current inflation-targeting system cannot be ruled out but did not specify what that might entail.
Meirelles, speaking at a seminar in Rio de Janeiro, said the global financial crisis has sparked 'ample discussion' over central banks' current policy focus on fighting inflation.
According to Meirelles, economic variables other than inflation alone are being monitored, including asset and housing prices as well as credit expansion.
He said core inflation, a measure of consumer price increases that excludes volatile items such as foods or energy, is gaining relevance as a main indicator over headline price indexes.
'The regime isn't being questioned because it has been successful,' Meirelles said. 'We are talking about fine-tuning here.'
The central bank, which uses the benchmark IPCA consumer price index as a guide when setting its Selic interest rate, has a 4.5 percent annual inflation target for 2009 and 2010, with a leeway of plus or minus 2 percentage points.
Though 12-month inflation through April, at 5.53 percent, is still running above the target, it has slowed in the face of an economic slowdown and analysts expect it to end the year around the center of the target.
Meirelles also said the government has alternative measures should Congress reject changes to a proposal to tax some savings accounts. He declined to elaborate on the alternative plans, saying only 'it is necessary for institutional bottlenecks to be removed for the reduction in interest rates to continue taking place.'
The target, as well as the central bank's explicit pursuit of inflation as a policy objective rather than growth or employment, has been widely criticized by politicians as well as business and union leaders.
(Reporting by Rodrigo Viga Gaier, Writing by Guillermo Parra-Bernal) Keywords: BRAZIL ECONOMY/INFLATION (guillermo.parra@thomsonreuters.com; 55 11 5644-7714; Reuters Messaging: guillermo.parra.reuters.com@thomsonreuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Meirelles, speaking at a seminar in Rio de Janeiro, said the global financial crisis has sparked 'ample discussion' over central banks' current policy focus on fighting inflation.
According to Meirelles, economic variables other than inflation alone are being monitored, including asset and housing prices as well as credit expansion.
He said core inflation, a measure of consumer price increases that excludes volatile items such as foods or energy, is gaining relevance as a main indicator over headline price indexes.
'The regime isn't being questioned because it has been successful,' Meirelles said. 'We are talking about fine-tuning here.'
The central bank, which uses the benchmark IPCA consumer price index as a guide when setting its Selic interest rate, has a 4.5 percent annual inflation target for 2009 and 2010, with a leeway of plus or minus 2 percentage points.
Though 12-month inflation through April, at 5.53 percent, is still running above the target, it has slowed in the face of an economic slowdown and analysts expect it to end the year around the center of the target.
Meirelles also said the government has alternative measures should Congress reject changes to a proposal to tax some savings accounts. He declined to elaborate on the alternative plans, saying only 'it is necessary for institutional bottlenecks to be removed for the reduction in interest rates to continue taking place.'
The target, as well as the central bank's explicit pursuit of inflation as a policy objective rather than growth or employment, has been widely criticized by politicians as well as business and union leaders.
(Reporting by Rodrigo Viga Gaier, Writing by Guillermo Parra-Bernal) Keywords: BRAZIL ECONOMY/INFLATION (guillermo.parra@thomsonreuters.com; 55 11 5644-7714; Reuters Messaging: guillermo.parra.reuters.com@thomsonreuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.