Cenbank says clear fiscal policy key for Brazil recovery -report

domingo 21 de julio de 2013 17:21 CEST

* Cenbank chief says working to regain investor confidence

* Tombini says economy continues to show weakness

* Inflation peaked in June; to ease further this year

BRASILIA, July 21 (Reuters) - The Brazilian government needs to be clear in its next fiscal policy steps to bolster investors' confidence in an economy that is showing new signs of weakness, central bank chief Alexandre Tombini was quoted as saying by a local newspaper on Sunday.

In rare comments about the government's fiscal stance, Tombini said an expected freeze in budgeted spending will be added to the bank's calculations to make its own decisions, daily Estado de Sao Paulo quoted him as saying.

President Dilma Rousseff's government is struggling to decide on the size of a spending freeze that was originally believed to reach up to 20 billion reais ($8.94 billion), but that local media says could now be as low as 5 billion reais.

"Whatever the government determines its has to do it with clarity, saying how they will get there," Tombini said. "For (investors') confidence its important that they say how they will get there."

He said the central bank is doing its part to regain investors trust by trying to control volatility in the exchange markets and raising interest rates to battle above-target inflation.

After slashing its benchmark Selic rate to record lows over the last two years, the central bank has embarked on one of the most aggressive tightening cycles in the world, raising rates 125 basis points since April to 8.50 percent.   Continuación...