UPDATE 1-Brazil central bank studying freeing up reserves for mortgage lending
(Recast with Tombini comments on reserve requirements)
BRASILIA May 26 (Reuters) - The Brazilian central bank is studying freeing up reserve requirements to foster lending for the real estate sector, bank chief Alexandre Tombini said on Tuesday.
Answering questions from lawmakers at a hearing, Tombini acknowledged the sector is particularly important for the once-booming economy.
Engineering and construction companies have called on the government to free up reserve requirements for banks to bolster mortgage lending. A shrinking economy and a corruption scandal at state-run oil company Petrobras that involves the country's largest engineering firms have forced the sector to fire thousands of workers this year.
Analysts have said that any moves to bolster mortgage lending would go against central bank efforts to raise borrowing costs to bring inflation back to the center of the official target in late 2016.
Earlier in the hearing, Tombini reiterated that the central bank will remain vigilant to bring inflation back to the target, signaling again that policymakers are not done hiking interest rates.
He added that efforts to tighten fiscal policy will help the central bank battle inflation, which hovers around 11-year highs. (Reporting by Marcela Ayres; Writing by Alonso Soto; Editing by Peter Galloway and Leslie Adler)
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