RIO DE JANEIRO/SAO PAULO, July 1 (Reuters) - The executive secretary of Brazil's Finance Ministry said on Tuesday that a slowdown in twelve-month inflation in May and June should open an opportunity for the central bank to revise the monetary policy stance.

"We complain about inflation and we should always worry about it, but it starts to fall in May and June, enabling us to review monetary policy and achieve lower interest rates in the country," secretary Dario Durigan told an event in Rio de Janeiro.

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In a unanimous decision last month, Brazil's central bank raised its benchmark interest rate to 15%, the highest since July 2006, and announced a "very prolonged" pause. The bank targets inflation at 3%, with a tolerance band of 1.5 percentage points in either direction.

Consumer prices in Latin America's largest economy rose 5.32% in the twelve months through the end of May, a decline from the April annual reading of 5.53%, according to data from statistics agency IBGE.

While June inflation figure was still not released, the latest reading of the IPCA-15 index showed that consumer prices stood at 5.27% in the twelve-month period through mid-June, falling from 5.40%.

"Brazil's conditions are good and we will soon be able to reverse the rise in interest rates," Durigan said.

In a separate event earlier on Tuesday, he also acknowledged a concern over the country's debt trajectory, but said the government needs time to implement a gradual fiscal adjustment.

Brazil saw its public debt rise by 354.42 billion reais ($65.21 billion) in the year through May, driven mainly by interest expenses, which increased amid the central bank's tightening cycle to curb inflation.

The expansion comes as markets remain skeptical that the inflation target will be met in the years ahead, given the government's continued increase in spending.

Durigan said the government remains committed to achieving fiscal balance and is poised to meet its fiscal goals this year and the next if lawmakers approve proposals it has submitted to Congress.

($1 = 5.4354 reais)

https://www.reuters.com/world/americas/brazil-finance-official-flags-debt-concern-urges-time-gradual-fiscal-adjustment-2025-07-01/