Brazil Central Bank Director Says Rate Hike Pace Can Change
(Bloomberg) -- Brazil’s central bank can alter the pace of its borrowing cost increases as it seeks to pull inflation back to target, a board member said on Wednesday.
“It could accelerate, or it could decelerate,” economic policy director Fabio Kanczuk said at an event for investors organized by HSBC. “Our 100bps pace is a hint, not a commitment. You see the new data, and you analyze it again. Things are changing all the time.”
Brazil’s central bank has been the most aggressive in the world, lifting the benchmark Selic by 425 basis points since March, to 6.25%. Policy makers are combating above-target inflation driven by a reopening economy and higher electricity bills. The monetary authority is expected to deliver its third consecutive full percentage point hike on Oct. 27.
Annual inflation in Latin America’s largest economy hit 10.25% in September. Central bankers see the current pace of tightening as “more than enough” to bring inflation back to their target in 2022, said Kanczuk.
Further deterioration in Brazil’s inflation outlook might require a faster pace of hikes, said Alberto Ramos, chief Latin America economist for Goldman Sachs Group Inc. “One hundred basis points per meeting is a good pace, but further deterioration through, for instance, rising inertial forces may require a faster and deeper short-term monetary response.”
Policy makers target annual inflation of 3.75% this year and 3.5% in 2022.
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