The International Monetary Fund (IMF) recently announced that Brazil continues in its attempt to control inflation - which is well above the official target - and has again drawn attention to the risks of this increase. The Fund supports the idea that the country needs to continue increasing the basic rate of interest in an attempt to get around the problem. According to coordinator of Monetary Studies at FGV's Brazilian Institute of Economics (IBRE), José Júlio Senna, IMF's guidance, together with certain actions, it is the only way out to make the country fall into place with respect to inflation. In fact, there is no other remedy. But a supplement is necessary. It is necessary to request the help from the fiscal side. Leaving the burden of fighting inflation exclusively on the hands of the Central Bank does not seem a good policy. The cost of the policy is very high. The International Monetary Fund, which always preached fiscal responsibility, should not have left this issue aside, Senna analyzes. Still according to him, in order to reverse the scenario, the country needs to pull the hand brake and resort to a more conservative policy. The important fact concerning the fiscal issue would be to turn the current policy into a contractionary one, which reveals itself considerably expansionary. This fiscal adjustment would certainly involve a reduction of total public spending, in net terms, accompanied by important changes in the composition of public expenditure, thus increasing the share of investments, he concludes. For more information from IBRE, please click here (in Portuguese).