BRASILIA Brazil's central bank chief Roberto Campos Neto said on Tuesday that policymakers believe there is still a significant interest rate differential in Brazil compared to advanced economies, which does not greatly limit their room for maneuver.

Speaking at an event hosted by Bradesco Asset Management, he cautioned that the liquidity environment will dry up, which is why the country needs to do its "homework" and have its fiscal situation in order.

(Reporting by Marcela Ayres, Editing by Louise Heavens)