MNI BRIEF: BCB Has No Discomfort With 3% Inflation Target -Gov

Central Bank of Brazil Governor Gabriel Galípolo said Tuesday the board has no "discomfort" with the 3% inflation target, which aligns with those of peer economies, and stressed that forward guidance for a smaller hike at the next meeting remains in effect.

The BCB raised interest rates by 100 basis points in March and signaled a smaller hike in May.

“We don’t have any discomfort with the 3% target. I believe the central bank is on track to pursue the 3% goal; that’s not really under discussion. Even when we compare with peers, we don’t see Brazil as an outlier in terms of having a 3% target,” he said at a Financial Stability Report presentation in Brasília.

"Everything we've mentioned remains in effect. In that sense, as was clearly stated, we are first responding to an inflation dynamic that is challenging for us, that’s the initial driver, which justifies the extension of the cycle," he added, emphasizing the BCB will set the interest rate at a sufficiently restrictive level and keep it there for as long as necessary to reach the target. (See MNI INTERVIEW: BCB Might Cut Sooner as Activity Slows - Serra)