BRASILIA: Brazil's central bank sees no room to cut interest rates as inflation remains persistently high and expectations have failed to drop despite a recession, according to the minutes of the bank's last rate-setting meeting released on Tuesday.
The central bank's monetary policy committee, known as Copom, left its benchmark Selic rate steady at 14.25 percent for the eighth straight time last week as expected, but changed its decision statement completely to detail the risks to its inflation outlook.
The bank also changed the date it released its minutes and detailed the committee's discussions in an effort to improve communications with markets that have long complained of confusing, contradicting statements.
In the minutes, the bank highlighted that its 2017 inflation forecast based on market expectations have failed to ease as much as it expected. Using its own parameters, inflation eases to the 4.5 percent center of the target in 2017, but under the market scenario inflation ends that year at 5.3 percent.
"The committee should seek to conduct monetary policy in a way that its projections, including the market scenario, point to inflation at the target in relevant horizons," the bank said in the minutes.
The concerns with persistently high inflation shows the bank is not ready yet to cut rates from near 10-year highs despite a crippling recession in its second year.
New central bank governor, Ilan Goldfajn, who took over in June, has vowed to bring inflation back to the 4.5 percent center of the official target in 2017. Still, inflation expectations from private economists remain above the target.
Comments
Comments are closed.