SAO PAULO (Reuters) -Brazil’s central bank believes that since its latest policy meeting the current level of its benchmark interest rate at 15% is sufficient to bring inflation to target, the bank’s monetary policy director said on Wednesday.
On the other hand, director Nilton David affirmed the current cycle is full of uncertainties, which prompts the bank to not hurry up policy decisions due to any specific data point or market noise, but take time to be sure about its moves.
“At the last Copom meeting, we concluded that, yes, it does look like this level of interest rates should be the one that is going to bring us within target,” he said at a Goldman Sachs conference in Washington.
“But if there is anything exceptional that we would have to correct (rates) for higher or lower, we will do so.”
Last month, policymakers kept the Selic rate at 15%, their highest level in almost two decades, signaling a “new stage” of prolonged pause as they hope to bring inflation back to its 3% target.
According to David, the decision was a “bold move” from the central bank because policymakers knew it would then require them to maintain rates for longer.
He stressed policymakers are still uncomfortable with market inflation expectations, calling them “higher than we would like them to be.”
The central bank sees the current monetary policy as “firm” and “tight,” but David cautioned the restrictive conditions have begun being perceived only very recently, mentioning the persistent strength of the labor market.
Latin America’s largest economy, which has grown above market expectations in the last few years, has shown signs of moderation, which proves the effects of monetary policy, he added.
(Reporting by Fernando Cardoso; Editing by Mark Porter and Alistair Bell)
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