the recent interest rate hike long term in USA demands that the emerging markets act with cautionsaid on Tuesday director of the Central Bank of Brazil, Gabriel Gallipoloafter the entity applied this month a higher-than-expected rate cut.
Brazil started his monetary easing cycle on August 2 with a lowering your interest rate of 50 basis pointsto the 13.25%the first in three years, after it raised it a total of 1,175 basis points to combat inflation and kept it stable for almost a year.
gallipole backed the bank’s decision to cut rates and affirmed that, despite the necessary caution, Brazil has some advantages over its emerging peers in the current context.
“We are aware that the scenarios of raise rates long-term interest in The United States demands caution from emerging countriessaid Gallipolo.
However, he added that Brazil currently enjoys great acceptance among foreign investors due to factors such as high levels of foreign exchange reserves and their ability to perform leading role in ecological transition.
gallipole was one of the first two members of the Council of the Central Bank appointed by the president Luiz Inacio Lula da Silvawho has asked the monetary authority to lower the interest rates since his inauguration in January.
In spite of the government pressureGalípolo – who was previously an official of the Ministry of Economy – reiterated on Tuesday that central bank decisions are “technical”.
Was one of the five members of the council that voted in favor of a 50 basis point cutwhile the other four voted in favor of a more modest drop of 25 basis points.
How will interest rates continue in Brazil?
The monetary authority pointed out that I would continue that trajectory in the coming months. Due to the improving inflation outlookbut Galípolo avoided giving any further clues about the Central Bank’s position, instead describing his official statement as “very precise”.
“Speculation is normal”said about future rate decisions. “But we have plenty of time until the next meeting and We will continue to monitor expectations, the anchoring of inflation and the international scenario”.
He brazilian monetary policy committeeknown as Copomplans to meet again on September 19 and 20.
Source: Ambito
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