MNI BRIEF: ‘Prolonged’ BCB Guidance Doesn’t Reset Each Meeting

The Central Bank of Brazil governor Gabriel Galipolo said Monday that the term “very prolonged” used in its forward guidance to indicate how long monetary policy will remain restrictive does not “reset” at each meeting.

The BCB has kept interest rates on hold at 15% since June and has been saying that rates need to remain restrictive for a “vey prolonged period," without specifying exactly how long.

"The prolonged period is not something that resets at every meeting we write. If you look at the integral of how long we’ve had an interest rate at a restrictive level, it’s a period that is still happening," he said at an event sponsored by XP in Sao Paulo.

"Even so, as we’re saying, despite that, we understand that the process has been a slow process of inflation convergence," he added. (See MNI INTERVIEW: BCB To Start Cuts In January - Figueiredo)