UPDATE 4-Brazil finance minister fails to tame markets amid policy ambiguity

jueves 21 de enero de 2016 20:15 GYT
 

(Adds Barbosa comment in Davos on inflation)

By Alonso Soto and Silvio Cascione

BRASILIA Jan 21 (Reuters) - Brazilian Finance Minister Nelson Barbosa failed to calm markets with promises of reform on Thursday, as investors said erratic policy signals raised doubts over the left-leaning government's ability to end the worst recession in decades in Latin America's largest economy.

Brazil's currency, the real, fell to a record low against the dollar and long-term interest rate futures surged a day after the central bank surprised markets by holding its key interest rate steady at 14.25 percent. It had previously signaled a hike was needed to curb high inflation.

The decision stoked concern among critics that President Dilma Rousseff had intervened to avert monetary tightening with the economy already on the ropes. Figures on Thursday showed Brazil lost 1.5 million payroll jobs last year, its worst annual result in nearly three decades.

The number of employed people in Brazil fell 3.7 percent in 2015. That decline is comparable to job losses in the United States during the height of its financial crisis in the 12 months after September 2008.

Barbosa, a leftist economist, said the crisis was temporary and that Brazil's economy would adjust to global headwinds

"This is not the new normal. This is a transition phase for Brazil," Barbosa said at a panel in the World Economic Forum in Davos, Switzerland. He added that the government would need to press ahead with "some structural changes."

The minister said previously that Brazil will seek to lower the cost of one the world's most generous pension systems and to simplify the tax code.   Continuación...