Brazil’s central bank said high inflation risks required monitoring and calm | Techy Kings

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BRASILIA, Nov 1 (Reuters) – Brazil’s central bank said that its inflation calculations remained consistent with its policy strategy, although risks remained high and required continued monitoring and calm, according to minutes of its latest policy meeting released on Tuesday.

With that message, the central bank indicated that with interest rates unchanged at a cyclical high, it continues to see no comfort in mentioning monetary easing.

In the minutes of the meeting held on Oct 25-26, when the rate-setting committee known as Copom kept the benchmark rate at 13.75%, policymakers said that their slightly upward revision for inflation reflected higher market price inflation in the short term and a small increase for price is administered.

“The committee assesses that the projection remains at a value consistent with the strategy of reaching levels around the target over the relevant horizon,” which includes 2023 and 2024, the central bank said.

But after admitting that market projections for inflation remain worse for an extended period, policymakers stressed that “risks remain high, requiring continued monitoring and calm.”

Alberto Ramos, chief Latin American economist with Goldman Sachs, estimates rate cuts will only start in the second quarter or possibly the third quarter of 2023.

“In the near term (next 4-6 months) the risk that Selic may need to be driven higher is low, but a conservative stance is warranted,” he wrote in a note to clients, citing robust labor market dynamics and lingering uncertainty around the stance fiscal in 2023.

Leftist President-elect Luiz Inacio Lula da Silva, who took office in January, has yet to detail his economic policies after vowing to scrap constitutional spending limits.

In a policy decision last week, the central bank had already kept its inflation forecast for this year unchanged at 5.8%, raising its forecast for next year to 4.8% from 4.6% last month, against a target of 3.25%.

For 2024, the inflation forecast increased to 2.9%, from 2.8% last month, compared to the target of 3%.

According to the latest Focus weekly survey, private economists project inflation at 5.6% this year, 4.9% in 2023 and 3.5% in 2024.

Report by Marcela Ayres; Editing by Steven Grattan and Chizu Nomiyama

Our Standards: Thomson Reuters Trust Principles.

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