MNI BRIEF: BCB Pause To See Lagged Tightening Effects -Guillen

Central Bank of Brazil Deputy Governor for Economic Policy Diogo Guillen said Friday that the board chose to “pause” its hiking cycle to assess the lagged effects of tightening, using slightly different language to the official communication which referred to an "interruption”.

"So we pause to assess whether it’s enough, look at the lagged impacts, evaluate how monetary policy is being transmitted, and judge that there will be a fairly prolonged period of stable rates afterward," Guillen told an event sponsored by Barclays.

The statement from the latest decision, which raised the rate by 25 basis points to 15%, said, "if the expected scenario materializes, the Committee foresees an interruption of the rate hiking cycle to examine its yet-to-be-seen cumulative impacts."

Guillen also expressed concern about unanchored inflation expectations and emphasized the resilience of economic activity. (See MNI INTERVIEW: BCB To Hold Rates At 15% Until Next Year- Velho)