August 3, 2017 / 12:25 PM / a year ago

Brazil central bank chief says economy weak but recovering

SAO PAULO, Aug 3 (Reuters) - Brazilian Central Bank President Ilan Goldfajn said on Thursday that Latin America’s largest economy remains weak though it is on course to show modest growth next year.

In an interview with a São Paulo radio station, he said Brazil may achieve growth of 2 percent in 2018 if the economy continues expanding at its current pace.

He also said he sees no risk to the continuing process of reducing inflation, adding the central bank will keep performing the role of keeping prices in check through adequate monetary policy.

“What we are seeing is a gradual recovery,” he told the Jovem Pan radio station.

Goldfajn refused to speculate on whether the government would change fiscal targets in view of falling tax revenue.

Last week, the central bank reduced its benchmark Selic rate to 9.25 percent, the seventh cut since October.

He also said reforms in Congress will help the country lower interest rates, referring to a planned pension reform.

Analysts forecast the Selic falling to 8 percent by the end of this year, according to a central bank poll released on Monday.

Brazil’s annual inflation rate declined in mid-July to 2.78 percent, the lowest in 18 years.

The country’s gross domestic product shrank more than 3 percent in each of the past two years, the deepest and longest downturn on record.

In June, however, the government said the GDP grew 1.0 percent in the first quarter from the preceding one, its biggest rise since the second quarter of 2013. (Reporting by Patrícia Duarte; Writing by Ana Mano; Editing by W Simon)

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