Gabriel Galípolo, president of the Central Bank, stated on Thursday that the monetary authority is ‘quite concerned’ about inflation and expectations in Brazil being above the target, although there is a fast disinflation process underway. He reinforced the restrictive monetary policy for an extended period.
‘The inflation and expectations remain above the target, which is a point of great concern for the Central Bank, but we are talking about an inflation that is in the process of reducing and returning to the target due to a Central Bank that has been consistently diligent and timely in combating any type of inflationary process,’ he said during a presentation at the Indonesia-Brazil Economic Forum in Jakarta.
However, he did not make predictions on when inflation could reach the target, which is 3% with a 1.5 percentage point margin. The latest Focus survey indicated that IPCA is expected to end this year with a 4.70% increase, according to the median of projections from experts consulted, with no prospect of the index reaching the target center by the end of each year until 2028.
In September, IPCA rose by 0.48%, accumulating a 5.17% increase in 12 months. Galípolo, who is part of a Brazilian government mission in Indonesia, reiterated the Central Bank’s stance on monetary policy, with high interest rates.
After maintaining the Selic basic rate at 15% in its most recent decision, the BC indicated its intention to keep the basic rate at this level for a ‘quite prolonged period’ to lead inflation to the continuous target of 3%.
‘The Brazilian economy has been going through a cycle of continuous growth… with a level of inflation that, although above the target, requires the Central Bank to maintain a high and restrictive interest rate for an extended period so that we can achieve this convergence, while managing to combine low unemployment, positive growth, and inflation that, looking at historical levels, is within a low range,’ he said.
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