The Central Bank of Brazil stressed on Tuesday that the cooling of economic activity is crucial to bring inflation to the target, while describing inflationary risks “Very relevant“The disagreement of inflation expectations and the overheating of the economy.
“The deceleration of aggregate demand is an essential element of the rebalancing process between supply and demand in the economy and convergence of inflation towards the objective,” he said in the minutes of his last monetary policy decision, in reference to its inflation target of 3%.
After uploading the rates last week at 100 basic points, to 13.25%, and announce another rise in March, those responsible for monetary policy also indicated in the minutes that market perceptions on the fiscal framework of the Government and sustainability Debt still weighing “significantly” about the prices and expectations of assets.
Looking ahead, the Central Bank said that economic activity will follow closely, along with the transmission of the exchange rate after the recent depreciation and volatility.
It will also monitor inflation expectations, which have been further disagree and remain crucial to determine the future evolution of inflation.
Morgan Stanley’s look
“In Brazil, the Central Bank (BCB) uploaded the interest rate at 100 basic points, taking it to 13.25%, and maintained a projection of another increase in March, with the possibility of additional adjustments in May. The monetary policy follows Being contractive due to concern for inflation expectations.
Regarding economic growth, which the government expects to be around 3.5% in 2024, the Central Bank said that recent data indicate the first signs of moderation, especially in the sectors of goods and credit, online With your reference scenario.
However, those responsible in charge of monetary policy warned that past decelerations were reversed later due to volatility that to a change in growth trends, which have shown a “remarkable resistance.”
“As the labor market remains heated, it is difficult to evaluate to what extent a possible deceleration would reflect a weakening of demand or supply pressures, with different repercussions on inflation,” the minutes point out, after unemployment reached a historical minimum. last year.
The minutes also pointed out the inflationary risks of a weaker currency, noting that US policies under the president Donald Trump They could weigh on national assets.
After citing last week a downward inflationary risk linked to a possible disinflation derived from world trade or financial disturbances -which many considered a pessimistic signal -,, The officials clarified that this risk would materialize if the reference scenario was not met.
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
