BRASILIA, March 28 (Reuters) –
Brazilian central bank director Diogo Guillen stressed on
Tuesday the risks of distancing inflation expectations from
official targets, as policymakers have indicated there was no
room for monetary easing in the near future.
Speaking at an event hosted by Goldman Sachs, Guillen,
the economic policy director, said a more persistent or
longer-lasting de-anchoring “greatly increases the cost of
disinflation,” and this is an crucial point considering the
central bank remains committed to achieving inflation goals.
Guillen also said the main channel through which the
government’s awaited fiscal framework will affect the balance of
risks for inflation is precisely via inflation expectations.
“This is the channel that we consider to be the most
important to have an effect on disinflation,” he said.
In
minutes
of the March 21-22 meeting, when the rate-setting committee
Copom kept the benchmark rate at 13.75%, the central bank had
stated that current monetary policy requires “serenity and
patience.” It indicated that worsening inflation expectations
justified its decision to maintain a hawkish stance.
Amid fears about the credit slowdown in Brazil, Guillen
stated that the movement is expected and is part of the process
of conducting monetary policy throughout this year.
Attention is being paid to verifying whether there is a
greater deceleration than is compatible with the scenario of
higher borrowing costs, he said, noting that the central bank
has instruments linked to macroprudential policy to address
frictions in the system should they occur.
(Reporting by Marcela Ayres; Editing by David Gregorio)
