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Copom Believes That Firm Action Required To Re-Anchor Inflation Expectations

BRAZIL
  • The BCB has published the minutes to its June 18-19 meeting here.
  • As highlighted in the post meeting statement, the Copom was concerned about rising inflation expectations, which had de-anchored since the previous meeting, and believes a firm response is required to re-anchor them:
    • "The Committee believes that reducing expectations requires a firm action by the monetary authority, as well as continuous strengthening of the credibility and reputation of both the institutions and the fiscal and monetary frameworks that make up the Brazilian economic policy. The Committee will not shy away from its commitment of reaching the inflation target and understands the fundamental role of expectations in the inflation dynamics."
  • Meanwhile, the committee raised its estimate for the real neutral interest rate to 4.75%, from 4.5% previously, which had been expected by analysts.
  • Looking ahead, the Copom remains committed to maintaining a contractionary stance for a "sufficient time at a level that consolidates both the disinflation process and the anchoring of expectations around the targets."
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