MNI BRIEF: Credibility Built Over Time, BCB's Campos Neto Says

MNI (MEXICO CITY) - Central Bank of Brazil governor Roberto Campos Neto said Wednesday that credibility in monetary policy is not built on the outcome of one or two meetings but rather through a consistent and transparent decision-making process over time.

“The best way to build credibility is by conducting monetary policy based on a technical and well-communicated framework, which is what we have been doing,” Campos Neto said at a Santander-sponsored event in São Paulo. “The exercise of credibility is not about one or two meetings, it’s about the decision-making process over time and the transparency in communication, which must always be technical.”

His comments come as some market participants wonder whether the central bank needs to resume interest rate hikes to reinforce its inflation-fighting credentials. 

Campos Neto reiterated that the board remains data-dependent and stressed the importance of maintaining flexibility by avoiding forward guidance. “There are moments when providing guidance has a negative expected value,” he added. (See MNI POLICY: BCB Divided Over Risks To Inflation)