When unemployment rates rise, the central bank allows inflation to grow a little more, so that the economic growth accelerates. The bank considers that high unemployment rates don’t allow sustainable and inclusive economic growth.
However, Olivier Castro, president of the monetary entity, argues that the determinants of employment are mostly related to internal and external economic cycles, the human capital of a nation, and the structure of the labor market, factors over which the bank has no saying.
In his opinion, an inflationary process triggered by the desire to reduce unemployment can damage the macroeconomic stability of a country, causing greater uncertainty about economic activity between employers, and making them more cautious regarding investments and recruitment, thus increasing unemployment and probably lowering production levels.