After maintaining its reference interest rate at 13.75% on Wednesday, the highest in six years, The central bank highlighted rising inflation expectations as a cause for concern and reiterated that it will not hesitate to resume rate hikes if disinflation does not follow the expected path.
However, the weekly Focus survey of more than 100 private economists, published by the entity, continues to show a median forecast of a 50 basis point cut in November, followed by another 50 basis point cut in December.
This scenario, unchanged since the beginning of this month, would place the reference interest rate at 12.75% at the end of this year.
Compared with the data prior to the monetary policy decision, the standard deviation of these expectations has decreased slightly, showing less variance in the projections related to this scenario. The central bank will publish the minutes of its last meeting on Tuesday.
Members of the Government and the current president Luiz Inacio Lula da Silvawho have criticized the central bank for potentially stagnating the economy by keeping rates high, have said that they want him to ease monetary policy to respond to the economic slowdown, the credit crunch, and overseas banking turmoil.
Source: Ambito
