MNI BRIEF: Over-Target Inflation Needs Restrictive BCB Policy

Central Bank of Brazil Governor Gabriel Galipolo said Tuesday that he will go through his entire mandate without reaching the 3% inflation target, which would justify keeping interest rates at a restrictive level for an extended period.

He emphasized that he took office as governor in January 2025 with inflation already above the target.

“Of the 11 months of this year, not once did I meet the target. I didn’t meet the target in any month. In every single month, I failed to meet the target,” Galipolo said in a public hearing at the Federal Senate when asked by lawmakers about high interest rates.

“The Focus market survey shows that the central bank will not be able to meet the target throughout my entire term,” he added, noting that BCB received a legal mandate of a 3% target. “The instrument given to me was the interest rate. And the central bank’s obligation is to use the interest rate to pursue the inflation target.” (See MNI BCB WATCH: Keeping 15.00% Rate For Longer Will Be Enough)