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MNI BRIEF: BCB's Campos Neto Points To Wage Inflation Concerns

(MNI) BRASILIA
BRASILIA

BCB governor Roberto Campos Neto emphasizes that long-term implicit expectations are decreasing.

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The Central Bank of Brazil is seeing a resurgence of inflation in areas where labor "is more intensive," Governor Roberto Campos Neto said Tuesday.

"Inflation has been falling … but looking deeper, it is marginally worse. We had a significant impact from airfare and vehicle registration, but we still believe it is within the [Copom] projected range," Campos Neto said at an event sponsored by BTG Pactual. "We are observing a resurgence of inflation in areas with more intensive labor. We are attempting to establish a correlation with the labor market." (See MNI INTERVIEW: No Acceleration Of Brazil Rate Cuts - Le Grazie)

Still, bond market measures of long-term implicit inflation expectations are stabilizing, he said, adding that it seemed that investors were becoming less worried that the BCB would loosen policy once he leaves office after the end of the year.

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The Central Bank of Brazil is seeing a resurgence of inflation in areas where labor "is more intensive," Governor Roberto Campos Neto said Tuesday.

"Inflation has been falling … but looking deeper, it is marginally worse. We had a significant impact from airfare and vehicle registration, but we still believe it is within the [Copom] projected range," Campos Neto said at an event sponsored by BTG Pactual. "We are observing a resurgence of inflation in areas with more intensive labor. We are attempting to establish a correlation with the labor market." (See MNI INTERVIEW: No Acceleration Of Brazil Rate Cuts - Le Grazie)

Still, bond market measures of long-term implicit inflation expectations are stabilizing, he said, adding that it seemed that investors were becoming less worried that the BCB would loosen policy once he leaves office after the end of the year.