MNI BRIEF: Unanchored Expectations Need Vigilance-BCB Galipolo

Central Bank of Brazil governor Gabriel Galipolo said Monday that unanchored expectations demand "vigilance" and will require maintaining interest rates at a very restrictive level for a prolonged period, adding that monetary policy transmission channels are functioning effectively.

"Expectations remain unanchored at a level that is quite uncomfortable and that, perhaps toward the end of 2025 into 2026, will require vigilance, demanding us to keep interest rates at a very restrictive level, as we have stated, for a prolonged period," Galipolo said at an event sponsored by the Sao Paulo Commercial Association.

"We can now see the monetary policy transmission channels working a bit more clearly in the credit market, and we continue to see a labor market that remains resilient," he said.

The BCB last month decided to hold its official Selic rate at 15.00%. (See MNI INTERVIEW: BCB To Hold Rates Until Q1 2026 - Le Grazie)