MNI BRIEF: BCB Guidance Hinges On Economic Path - Guillen

The Brazilian central bank's forward guidance on monetary policy is conditioned on the expected scenario coming to pass, something financial markets appear to be ignoring, deputy governor for economic policy Diogo Guillen said Thursday.

"There seems to be confusion about what forward guidance is and what interest rate determination is. It is an additional instrument of monetary policy, and we can follow the same path with or without guidance. Our forward guidance is conditional on the expected scenario, which markets ignore," Guillen said an event sponsored by Goldman Sachs, adding that the board will evaluate whether the signal is appropriate at each meeting.

In January, the BCB reduced its official rate by 50bp to 11.25% and indicated that more cuts of the same magnitude would come in the "next meetings," effectively committing policymakers to the current pace until at least the May decision. (See MNI POLICY: G20 CenBanks Worried By Optimistic Markets)