BRAZIL: BCB’s Galipolo, Guillen Reiterate Hawkish Messaging
Sep-25 16:24
- Continuing to monitor remarks from BCB Governor Gabriel Galipolo and Deputy Governor Guillen who have been discussing the central bank’s Q3 monetary policy report in a press conference this afternoon. There has been nothing particularly new from them, as they have been reiterating the Copom’s hawkish, high-for-long rate messaging.
- Galipolo has noted the strength of the labour market, with the economy close to full employment. He says that the central bank remains data dependent and the goal is to see if rates are high enough to ensure the convergence of inflation to target. On the FX, he reiterates that the BCB operates under a floating regime and only intervenes in cases of market dysfunction. He adds that the central bank has no specific target for FX swaps.
- Meanwhile, Guillen has emphasised that the goal of monetary policy is to bring inflation back to the 3% target - not just to within the target range – within the relevant horizon for monetary policy (which runs six quarters ahead).
- To recap, the Q3 MPR earlier highlighted the BCB’s hawkish inflation forecasts, with inflation tracking above target through the relevant horizon (at 3.4% in Q1 2017) and still remaining above target (at 3.1%) as far out as Q1 2028.
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