Brazil‘s Lula mulls inflation target change as interest rates ’inexplicable

SAO PAULO (Reuters) -Brazilian President Luiz Inacio Lula da Silva on Thursday again criticized the countrys interest rates, saying at a meeting with journalists that current lending costs were inexplicable and hinting at a potential change to inflation targets.

“If the inflation target is wrong, change the target,” Lula said, according to remarks broadcast by TV channel GloboNews.

GloboNews reported that Lulas spokesman Paulo Pimenta said the president was talking about an “hypothetical scenario,” but the topic would be discussed once he is back from a trip to China later this month.

Brazil has an inflation target of 3.25% for this year, which will be lowered to 3% in 2024, but consumer prices reached 5.6% in the 12 months through February. Benchmark interest rates stand at a six-year high of 13.75%.

At the same meeting, Lula also said his government would eventually alter the fuel pricing policy of state-run oil giant Petrobras, but that the matter was not being discussed at the moment. He noted any change would be “very judicious”.

On Wednesday, shares in Petrobras took a dive after Mines and Energy Minister Alexandre Silveira said the government would scrap the firms current policy of tracking international prices, but pared losses when the company said there was still no formal proposal from the Lula administration.

(Reporting by Eduardo Simoes and Pedro Fonseca; Writing by Gabriel Araujo; Editing by Steven Grattan)