Brazil’s central bank ‘very committed’ to current rate cut pace -director
2023.08.15 18:47
© Reuters. People walk in front the Central Bank headquarters building in Brasilia, Brazil March 22, 2022. REUTERS/Adriano Machado/file photo
BRASILIA (Reuters) – Brazil’s central bank director of international affairs Fernanda Guardado said on Tuesday policymakers are firmly dedicated to the current pace of rate cuts, after the bank flagged it expects reductions of 50 basis points in its next policy decisions.
Speaking at an event hosted by XP (NASDAQ:), she said the central bank has sought to stress that the conditions put in place to change the pace of easing are “very difficult” to be achieved and that “the bar is too high.”
“We are very committed to the pace that we foresee,” she said.
The central bank cut its benchmark rate by 50 basis points earlier this month to 13.25% after holding it steady for nearly a year, and stressed that an acceleration would “require substantial positive surprises” in inflation.
Guardado said a meaningful surprise in inflationary dynamics couldn’t be expected to arise from marginal fluctuations of “5bps here or there” or positive statistical outliers confined to a single month.
She also highlighted that re-anchoring inflation expectations towards the official targets was only partial, still being “uncomfortable.”
“It is up to the central bank to take action and demonstrate its firmness,” she said. “We are very committed to the convergence of inflation towards the 3% target.”
The director also said that the central bank will act firmly to ensure that there will be no leniency “by any means” and is confident in its current strategy.
