Comments from Brazil’s central bank
- Reaffirms forward guidance that it doesn’t intent to reduce monetary stimulus as long as specified conditions met
- Latest readings in inflation were above expectations
- Despite the expected cooling in food prices, inflation is still expected to be high
- Inflation expectations and baseline forecasts remain below target for relevant policy horizon
- Continues to monitor inflation developments carefully, in particular, underlying inflation
- Soon the conditions for maintaining forward guidance may not be satisfied
- Forward guidance removal doesn’t mean rate hike
The drop in BRL this year has certainly been inflationary and that’s unwinding now. At the same time, you can see the growing concerns about inflation.