The use of an expansionary fiscal policy in times of economic growth generates inflationary pressures and pushes the Central Bank to increase interest rates, economist Paulo Picchetti, appointed by President Luiz Inácio Lula da Silva to the Directorate of International Affairs, said on Tuesday and the Management of Municipal Corporate Risks.
Speaking at a hearing at the Senate Economic Affairs Committee (CAE), Picchetti stated that the BC must monitor the evolution of the public finances scenario to implement monetary policy, underlining that the fiscal framework approved this year has the great merit of indicating a debt sustainability trajectory.
According to him, a sustainable path for public debt ensures that the Central Bank plays the role of price stabilization by defining interest levels consistent with growing activity and maintaining employment.
Source: Terra
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