MNI BRIEF: No Advantage Signaling Terminal Rate-BCB's Galipolo
Brazil's central bank deputy governor for monetary policy Gabriel Galipolo says data-dependency takes priority over guidance.
The Central Bank of Brazil would not gain anything by signaling how far it is likely to cut rates, Deputy Governor for Monetary Policy Gabriel Galipolo said on Friday, adding that the current forward guidance committing to 50-basis-point cuts per meeting was sufficient.
"We see no value in anticipating the terminal rate now. Part of the half-point strategy is to buy time to see how things unfold," he said at an event sponsored by Money Report.
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)
"At some point, we will have to withdraw the plural [from the guidance indicating more than one upcoming cut], and there may be a cost, there's a risk. But if all goes well, we may have gained an additional monetary policy tool," Galipolo said, adding that data dependency took priority over any need for guidance.