The Gap Between Intention and Action

BRAZIL ECONOMICS - Report 12 Aug 2024 by Alexandre Schwartsman, Cristina Pinotti and Diego Brandao

The Monetary Policy Committee (Copom) minutes state that the Central Bank is prepared to hike interest rates if necessary to meet the inflation target. However, the path of interest rates in light of deteriorating expectations, the increase in the neutral real interest rate estimate, and a tighter output gap suggests that the Central Bank has adopted, in practice, an implicit inflation target slightly above 3.5%.

In our assessment, recent inflationary dynamics, marked by likely persistent pressures, already appeared incompatible with inflation convergence to the target, even at the time of the last Copom meeting. Nonetheless, barring a significant deterioration in BCB’s inflation forecasts in coming months, we expect the Central Bank to keep the Selic rate unchanged until the end of the year.

Now read on...

Register to sample a report

Register
Sign-in
Forgot your password?
Copyright 2024 GlobalSource Partners. All rights reserved. This report is prepared for GlobalSource Partners’ clients and may not be redistributed, reproduced, stored in a retrieval system, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of GlobalSource Partners. This report is distributed simultaneously to our website and other portals used by GlobalSource Partners. The information herein was obtained from various sources and is believed to be reliable but GlobalSource Partners does not warrant its completeness or accuracy. Neither GlobalSource Partners nor any Country Analyst, officer or employee accepts any liability whatsoever for any direct, indirect or consequential damages or losses rising from any use of this report or its contents.