Brazil’s first woman President Dilma Rousseff vowed to stop the ‘plague’ of inflation as she took over from Luiz Inácio Lula da Silva.
Addressing the congress for the first time on Saturday, Ms. Rousseff said: “To ensure the continuation of the current economic growth cycle we need to ensure stability, especially price stability. We won’t allow under any hypothesis that this plague returns to eat away our economic tissue and hurt the poorest families”.
Mr. Lula Da Silva was the most popular Brazilian President on record who ensured the economy grew fastest last year since mid 1980s. Ms. Rousseff pledged to continue her predecessor and political mentor’s policies.
“Many things have improved in Brazil, but this is just the beginning of a new era”, said a visibly emotional Ms. Rousseff. My promise is …. to honour women, to protect the most fragile, and to govern for all”.
The Brazilian economy has grown at 7 percent last year, but inflation remained at an alarmingly high level of 6 percent; much higher than the government’s targeted 4 percent.
The runaway inflation has been blamed to international rise in commodities prices. However, Brazil’s fast economic growth has also caused supply constraint, stoking inflation further.
The central bank is expected to raise lending rates soon, against the wishes of Ms. Rousseff’s cabinet colleagues. However, the President of the Central Bank Henrique Meirelles said last month that hiking rates was the only way to contain price rise and “a benign inflation path”.
The country’s infrastructure needs to be ramped up ahead of the football World Cup 2014 and Olympics in 2016 and Ms. Rousseff touched upon the subject of tax reforms in her inaugural speech.
Ms. Rousseff is expected to maintain a low profile internationally and focus more on domestic issues initially.