With the message, the central bank indicates that with interest rates unchanged at a cycle high, it continues to see no comfort in mentioning monetary easing.
In the minutes of the meeting held Oct 25-26, when the rate-setting committee known as Copom kept the benchmark rate at 13.75%, policymakers said that their slight upward revisions for inflation reflect higher inflation of market prices in the short term and a small increase for administered prices.
“The Committee assesses that the projections remain at values consistent with the strategy of reaching a level around the target over the relevant horizon,” which includes 2023 and 2024, said the central bank.
But after acknowledging that market projections for inflation remain stable – and worse – for extended periods, policymakers stressed that “risks remain high, requiring continuous monitoring and serenity.”
In last week’s policy decision, the central bank had already held its inflation outlook for this year unchanged at 5.8%, raising its forecast for next year to 4.8% from 4.6% last month, compared to a 3.25% target.
For 2024, the inflation forecast increased to 2.9%, from 2.8% last month, compared to a 3% target.
According to the latest Focus weekly survey, private economists project inflation at 5.6% this year, 4.9% in 2023 and 3.5% in 2024.
In the minutes, policymakers also said they are paying “special attention” to services inflation, which depends on inflationary inertia and the output gap and will become clearer over time.
Source: Economy - investing.com
