(Bloomberg) -- Brazil's Central Bank Chief Roberto Campos Neto said policy makers will not take borrowing costs to a neutral level at this moment because economy still needs stimulus, according to O Estado de S. Paulo newspaper, citing an interview with him.
Unless there is an extraordinary change in conditions, interest rates will rise by another 75 basis points in May, he said. Campos Neto also repeated that the Central Bank does not make monetary policy based on the exchange rate and is most concerned with inflation, according to Estado.
The Central Bank president expressed worry over Brazil's budget bill, which was approved with an artificial reduction in mandatory spending. Campos Neto said that if there is a perception the budget is unworkable, Brazil's fiscal risks will rise and monetary policy will be hindered, according to Estado.
Campos Neto denied being invited to replace Economy Minister Paulo Guedes. He said their ideas are in alignment. The central ank chief also gave assurances that he has a mission to fulfill and has been given total freedom to act.
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