Brazil cen­tral bank mon­i­tor­ing econ­omy be­fore next move

The Pak Banker - - FRONT PAGE -

Brazil's cen­tral bank said do­mes­tic and global un­cer­tain­ties re­quire fur­ther mon­i­tor­ing but could im­prove con­di­tions for the con­ver­gence of in­fla­tion to­ward the tar­get in 2017.

Pol­icy mak­ers, led by their Pres­i­dent Alexan­dre Tom­bini, kept the key rate un­changed at 14.25 per­cent last week for the fifth straight meet­ing, match­ing the me­dian fore­cast of an­a­lysts sur­veyed by Bloomberg.

Two of the eight board mem­bers -- Tony Volpon and Sid­nei Cor­rea Mar­ques -- voted for a half-point in­crease to 14.75 per­cent for the third con­sec­u­tive meet­ing, as in­fla­tion re­mains in the dou­ble dig­its.

The dis­senters ar­gued an in­crease would an­chor in­fla­tion ex­pec­ta­tions and re­duce the risk of miss­ing the tar­get, ac­cord­ing to the min­utes pub­lished on the cen­tral bank's web­site.

Tom­bini has said re­peat­edly in re­cent weeks he ex­pects in­fla­tion to ease in the first half of the year, as the re­ces­sion fur­ther di­min­ishes de­mand and the govern­ment stops rais­ing reg­u­lated prices.

An­a­lysts sur­veyed by the cen­tral bank bet its next move will be a rate cut in 2017, as political pres­sure mounts to help re­vive eco­nomic growth.

"The ma­jor­ity of the mem­bers of the Copom con­sider that do­mes­tic and mainly in­ter­na­tional un­cer­tain­ties jus­tify con­tin­u­ing to mon­i­tor the evo­lu­tion of the macroe­co­nomic sce­nario to then de­fine the next steps in its mon­e­tary pol­icy strat­egy" ac­cord­ing to the ma­jor­ity view pub­lished in the min­utes to the March 1-2 meet­ing.

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