Brazil's central bank chief Henrique Meirelles cautioned investors on Friday that domestic markets may be overly euphoric and rejected a proposal to change the country's inflation targeting scheme.
Meirelles, Brazil's longest-serving central bank chief, said he would decide about joining a political party in 10 days but that he may also return to the private sector instead of running for public office in next year's election. Brazil's stock and currency markets have rallied sharply in recent months on a widespread view that Latin America's biggest economy is turning a corner. The economy grew 1.9 percent in the second quarter of this year after contracting for the previous two quarters.
"I believe there is a component of euphoria," Meirelles told Reuters in an interview when asked whether current market levels were backed up by solid second-quarter growth figures released last week. He said it was important for investors "to be increasingly alert" not to drive asset prices to unrealistic levels, Meirelles said.
The Sao Paulo stock market has risen 60 percent so far this year, while Brazil's currency, the real, gained more than 28 percent against the dollar in 2009. Meirelles, who has been considering a political career for some time, said he would decide within 10 days whether to join a political party but only next year whether he would run in October 2010 elections. Meirelles, aged 64, is considering to run for the governorship of his home state of Goias, local politicians have said. By law, he has until October 3 to join a political party in order to run in next year's vote.
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