The Copom stressed that “the decision also implies smoothing out fluctuations in the level of economic activity and promoting full employment.”
Later, the Committee pointed out that “it will remain vigilant, evaluating whether the strategy of maintaining the basic interest rate for a sufficiently long period will be able to ensure the convergence of inflation. The Committee reinforces that it will persevere until not only is the disinflation process, but also the anchoring of expectations around its goals. The Committee emphasizes that future steps of monetary policy can be adjusted and will not hesitate to resume the adjustment cycle if the disinflation process does not proceed as expected” .
The BCB highlights that “among the upward risks for the inflationary scenario and inflation expectations, a greater persistence of global inflationary pressures stands out; an uncertainty about the future of the country’s fiscal framework and additional fiscal stimuli that imply sustaining demand aggregate, partially incorporated into inflation and asset price expectations; and a narrower output gap than the one currently used by the Committee in its base scenario, particularly in the labor market”.
Meanwhile, among the downside risks, the Copom highlights a new drop in the prices of international raw materials in local currency; a sharper-than-expected slowdown in global economic activity; and maintaining tax cuts that are projected to reverse in 2023.”
The monetary authorities estimated that the inflation projections are located at 5.8% for 2022, 4.6% for 2023 and 2.8% for 2024.
Source: Ambito
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