Consumer prices in the 12 months to March reached their lowest point since January 2021, at 4.65%, according to data released on Tuesday, which led to a significant rise in the Brazilian stock exchange and a strengthening of the currency against the dollar.
In a presentation to investors organized by XP (NASDAQ:XP) Investimentos in Washington and released by the central bank, Campos Neto also highlighted that the demand-driven component of inflation in the country remains “relatively strong.”
This assessment contrasts with that of President Luiz Inacio Lula da Silva and his political allies, who have argued that the country is not experiencing demand-driven inflation, fueled by consumption, and therefore the restrictive monetary policy of the central bank is not justified.
Policymakers have kept the interest rate unchanged at a six-year high of 13.75% since September, despite frequent criticism from Lula.
Campos Neto further noted that long-term inflation expectations were anchored towards official targets in 2022, but there has been a deterioration process since November, which led markets to star pricing rate hikes on a six-month horizon.
Nevertheless, he admitted that financial markets have started in February pricing in cuts to the bank’s benchmark interest rate again.
Source: Economy - investing.com
