MNI BRIEF: No Trigger To Start Rate-Cut Cycle - BCB's Guillen

Central Bank of Brazil’s deputy governor for economic policy Diogo Guillen said Monday there is no trigger or single indicator that would prompt the board to start cutting rates, noting that Copom looks at a range of indicators but emphasizing that unanchored inflation expectations are the “main point.”

“Everyone likes to think about a trigger for something to happen. We have emphasized that the reaction function we have maintained in our communication, looking at projections, expectations, the balance of risks, current inflation, and the output gap, all of that remains valid, and that’s what we will continue to monitor over time with regard to expectations.”

“The main point is that expectations are unanchored. That is the key issue,” he said at an event sponsored by HSBC Brazil.

The BCB kept the interest rate at 15% this month and said monetary policy should remain significantly contractionary for a prolonged period. (See MNI BCB WATCH: Copom Reiterates Higher For Longer Strategy)