(Reuters) -Brazil's Finance Minister Fernando Haddad said on Wednesday that core inflation remained high due to persistent underlying pressures and noted that the central bank was acting accordingly with
its restrictive stance.
The remarks were made in a written statement marking Brazil's participation in the International Monetary Fund and World Bank's annual meetings in Washington.
After highlighting a favorable medium-term outlook for Latin America's largest economy, Haddad acknowledged that "core inflation remains relatively elevated," citing headline inflation expectations above the 3% target.
"Accordingly, monetary policy remains in contractionary territory, underscoring the central bank of Brazil's unwavering commitment to delivering on the target and reanchoring expectations," he added.
Haddad did not travel to Washington, instead remaining in Brazil to debate alternatives to a key fiscal measure that expired in Congress last week. His statement serves as guidance for the ministry's delegation.
Last week, the minister criticized Brazil's interest rates as "excessively restrictive" but stressed that was a personal view and not a challenge to the central bank's autonomy.
The bank held its benchmark rate steady at 15% - its highest level in nearly two decades - in September for a second straight meeting and signaled it would remain there for a prolonged period to bring inflation back to the target.
Consumer prices rose 5.17% in the 12 months through September, up from 5.13% in August.
Haddad said economic activity is now near its potential after outperforming expectations in recent years, and inflation is gradually converging towards the official goal.
He also noted that President Luiz Inacio Lula da Silva's administration will continue using fiscal policy to promote social justice and well-being, while considering the economic cycle.
Amid global trade tensions, Haddad also called for the removal of unilateral trade restrictions and the restoration of predictable, rules-based frameworks to safeguard global growth.
(Reporting by Marcela Ayres; Editing by Joe Bavier)
