BRASILIA, March 14 (Reuters) – Brazil’s finance minister Fernando Haddad said the economy may grow as much as 1% in the first quarter and signaled that full-year expansion will depend on the path of interest rates, as expectations for the start of monetary easing are clouded by surging oil prices.
In an interview with local outlet Opera Mundi late on Friday, Haddad said gross domestic product between January and March likely rose 0.8% to 1% from the previous quarter, supported by government measures to spur credit and domestic demand under President Luiz Inacio Lula da Silva.
For the full year, growth above 2% “will depend on interest rates,” he said.
His remarks came the same day as the finance ministry’s economic policy secretariat projected 2.3% growth this year.
Haddad said he was less concerned about fiscal indicators than about borrowing costs, which he described as a “handbrake” on activity despite what he called the “lowest cumulative inflation in four years.”
Oil price volatility following the U.S.-Israeli conflict with Iran and its potential inflationary impact has muddied market bets on an expected start to rate cuts next week.
The central bank signaled in January it was moving toward lowering the benchmark rate this month from its near two‑decade high of 15%, held steady since last July.
On Friday, interest‑rate futures implied most bets on a 25-basis-point cut, with rising odds of no change. Before the Iran conflict, markets had largely expected a 50-basis-point reduction.
(Reporting by Marcela Ayres, Editing by Louise Heavens)
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