Meirelles Says Brazil Central Bank in Tightening Mood

Brazil central bank President Henrique Meirelles said the nation’s policy makers are already in a “tightening mood” as they work to keep inflation within their target range.

“We are committed to keeping inflation on target,” Meirelles said today in a Bloomberg Television interview from Busan, South Korea. “We have exited from all the liquidity measures which were taken” during the financial crisis, and “we are taking the necessary steps to make sure the Brazilian economy is all balanced,” he said.

Policy makers in April increased the benchmark interest rate after keeping it at a record low for nine months, amid forecasts that Latin America’s biggest economy will expand at the fastest pace in two decades this year. Analysts surveyed in a weekly central bank poll predict that accelerating demand will drive inflation above the government’s target this year and next.

“We are already in a tightening mood,” said Meirelles in Busan, where he is attending a gathering of Group of 20 finance ministers and central bank officials.

Meirelles also said Brazil is well placed to “help” bring its experience of fiscal and debt crises to European nations.

Brazil “faced this kind of problem many times in the past,” including changes in currency valuations and balance of payments, as well as fiscal problems, he said.

“We learned our lessons.”

‘Vigorous Action’

Meirelles, before raising the central bank’s benchmark Selic rate to 9.5 percent from 8.75 percent, on April 25 said that it would require “vigorous action” by the central bank to bring consumer-price gains back to target.

The national monetary council sets Brazil’s inflation target, currently 4.5 percent plus or minus two percentage points for this year and 2011. The council comprises the central bank president, finance minister and budget minister.

Inflation, as measured by the government’s benchmark IPCA- 15 price index, was 5.26 percent in the 12 months through mid- May, the highest rate in a year. Annual price increases have exceeded the government’s target in each month this year.