Brazil needn't fear Bernanke-Bartiromo episode. Lula said Brazil's economy is on sound footing following a rocky week in the country's financial markets and expressed dismay at the havoc stemming from Federal Reserve Chairman's remarks to a U.S. television journalist.
Brazil needn't fear Bernanke-Bartiromo episode-Lula
Fri May 26, 2006 11:15 AM ET
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BRASILIA, Brazil, May 26 (Reuters) - President Luiz Inacio Lula da Silva said on Friday that Brazil's economy is on sound footing following a rocky week in the country's financial markets and expressed dismay at the havoc stemming from Federal Reserve Chairman's remarks to a U.S. television journalist.
"How can it be possible that somebody says something off-the-record and that causes pandemonium in global markets?," Lula asked reporters in Brasilia, the capital.
The president was referring to a recent episode involving Bernanke and CNBC television anchor Maria Bartiromo that ended up roiling financial markets around the globe.
After speaking with Bernanke at the annual White House correspondents dinner, the reporter on May 1 revealed that the Fed chief had told her he was disappointed with the views of some investors that he was dovish on inflation.
Financial markets everywhere trembled after Bernanke's remarks were made public, since they seemed to suggest more interest rate rises in the United States. Brazil's stock market and currency posted steep losses, before recovering slightly late this week.
But Lula said he was not concerned about the market turbulence.
"The economy is stable and we have nothing to worry about," he said. "Obviously, we have to always remain vigilant."
Lula also said it was up to the market to determine the value of the Brazilian real <BRBY>, which went on a rollercoaster ride this week.
The real on Wednesday posted its strongest one-day loss since 2002, falling 4.76 percent. It rebounded 4.54 percent on Thursday in its strongest one-day gain in four years amid volatile emerging markets. Brazil's stock market also showed almost as sharp movements.
In Washington on Tuesday, Bernanke told a Senate panel that he had made a mistake by talking with Bartiromo.
"That episode you refer to was a lapse of judgment on my part. In the future, my communications with the public and with the markets will be entirely through regular and formal channels," Bernanke told the Senate Banking Committee.
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