Brazil’s Central Bank Policy Meeting

By Marcela Ayres

BRASILIA (Reuters) – Brazil’s central bank has not provided guidance for its upcoming policy meeting due to the need for flexibility as it aims to bring inflation back to its 3% target, stated Governor Roberto Campos Neto on Wednesday.

Speaking at an event hosted by Santander, Campos Neto acknowledged that the lack of clear signaling increases market volatility. However, he emphasized, “we chose not to provide guidance precisely because we believe it is important to have flexibility at this moment.”

He added, “The best way to maintain credibility is to conduct monetary policy based on a technical and well-communicated framework.”

Brazil’s central bank maintained its Selic benchmark rate at 10.5% during its July meeting for the second consecutive time. The next policy meeting is scheduled for September 17-18.

Campos Neto reiterated that the central bank is committed to reducing inflation to the target, calling this message “very important.” Recent official data indicated that annual inflation in Brazil reached 4.35% in mid-August.

In his written remarks for the Santander event, Campos Neto noted that Brazil’s disinflation process has slowed, and inflation expectations have recently deviated from the official target.

He highlighted the significant role of “services inflation,” which is more persistent, in the current stage of Brazil’s disinflationary process. Campos Neto also mentioned emerging signs that a robust labor market might be driving up prices in the service sector.