Newly re-elected Brazilian President Dilma Rousseff said her government will step up the fight against high inflation and strengthen public accounts with budget cuts, local media reported on Thursday.
In an interview with Brazil’s four major newspapers, Rousseff said the government would have to “do its homework” by looking for ways to cut spending and not rely on interest rates to curb inflation.
“We need to tighten inflation controls,” Rousseff was quoted as saying by newspaper Folha de S.Paulo. “We have an internal problem with inflation.”
The leftist leader is under growing pressure to limit spending, slow price increases, and jump-start the economy to win back investors worried about her tendency toward heavy-handed economic policies.
Rousseff said government expenditures would be looked at “through a magnifying glass” and suggested changes would be implemented gradually, according to the website of newspaper O Globo. She did not specify what could be cut from the budget, but added that “several accounts can be reduced.”
Economists cite hefty government spending and a tight labor market as chief reasons for Brazil’s stubbornly high inflation, which is currently running at 6.75 percent on a 12-month basis, according to October’s data. September inflation data is due to be released on Friday, with a Reuters poll suggesting a slight decline to 6.65 percent.
The central bank shocked investors with a surprise rate hike last week in a bid to tame inflation that risks ending the year above the bank’s target of 4.5 percent, plus or minus two percentage points.
Rousseff said she has no plans to alter the official target range.
(Reporting by Asher Levine; Editing by Alonso Soto and Chizu Nomiyama)