MNI BRIEF: BCB Gradual Hike To Monitor Data - Minutes
MNI (BRASILIA) - All members of the Central Bank of Brazil’s board agreed that the hiking cycle should start “gradually,” minutes from the last meeting said Tuesday, adding that this strategy allows for data monitoring while the transmission mechanisms of monetary policy begin to operate.
"The Committee considered that the start of the cycle should be gradual to, on the one hand, benefit from diligent data monitoring, especially in a context of uncertainties, both in external and domestic scenarios, but, on the other hand, allow the transmission mechanisms of monetary policy that will enable the convergence of inflation back to the target to begin operating. All members agreed to start the monetary policy tightening cycle gradually," the minutes showed.
The document stated that unanchored inflation expectations were a factor of concern “shared by all committee members.” The BCB raised its official Selic rate by 25 basis points to 10.75% last week, following two consecutive meetings holding rates steady and after nearly a year of aggressive easing. (See MNI INTERVIEW: BCB To Step Up Hiking Pace In Nov.-Figueiredo)