(Adds comments from central bank director)
SAO PAULO/FORTALEZA, Feb 19 (Reuters) - Central bank chief Alexandre Tombini said Brazil’s inflationary pressures did not permit interest rate cuts, adding the decision to hold interest rates stable last month responded to greater global economic uncertainty.
“This inflation outlook does not allow for consideration of looser monetary policy,” Tombini said in a late Thursday television interview on Globo News.
Brazil’s central bank decided to leave its benchmark interest rate at 14.25 percent last month, despite inflation above 10 percent and market expectations that the bank would raise rates.
Central bank director Altamir Lopes also said on Friday that the bank was not considering rate cuts, dismissing market speculation that policymakers could lower borrowing costs to give a breather to an economy mired in recession.
Lopes, one of the bank’s eight voting board members, said he believes that a sharp drop in government-controlled prices and global economic uncertainties will help lower inflation back to the target range of between 2.5 and 6.5 percent.
Tombini said in the interview that there had been no political interference from President Dilma Rousseff, adding that Brazil was not the only country to respond to the growing economic volatility this year. Central banks in Japan and Europe have also taken a more cautious approach to monetary policy.
Tombini and the government have played down concerns about interference in rate-setting policy, as Rousseff’s leftist base blames tighter credit for pushing Brazil deeper into what may be its worst economic contraction in almost a century.
There was “zero political influence” in the January rate decision, Tombini said. (Additional reporting by Marcela Ayres in Fortaleza and Reese Ewing in Sao Paulo; Additional reporting by Patricia Duarte; Editing by Alison Williams and W Simon)