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Reuters
26-06-2025
- Business
- Reuters
Brazil central bank stands by inflation target despite forecast gap
BRASILIA, June 26 (Reuters) - Brazil's central bank remains "absolutely" committed to pursuing its 3% inflation target, its governor said on Thursday, despite the bank having signaled it will hold rates even as projections show inflation staying above the goal through 2027. Speaking at a press conference, Gabriel Galipolo said the central bank's projections take into account the expected interest rate path reflected in the median estimates from private economists in the Focus survey its conducts weekly. However, he emphasized that this path does not necessarily represent the rate trajectory the bank will follow. "There are several paths to reach the center of the target," he said. "We are absolutely committed to it." Last week the central bank raised its benchmark interest rate by 25 basis points to 15%, a near two-decade high, and signaled a "very prolonged pause" in its efforts to tame consumer prices. In their policy statement, policymakers had also emphasized they would not hesitate to resume rate hikes if needed. Galipolo said on Thursday the monetary authority would assess a broad set of indicators, rather than any single metric, when evaluating whether to opt for a new rate increase. Earlier in the day, the central bank's quarterly monetary policy report projected annual inflation at 3.2% by the end of 2027, still above the 3% target, which has a tolerance band of 1.5 percentage points in either direction. For the fourth quarter of 2026, the relevant horizon for current policy decisions, annual inflation is seen at 3.6%. In the same press conference, economic policy director Diego Guillen stressed that the central bank was not extending the horizon to meet its inflation target. Galipolo also said that this week's foreign-exchange interventions were aimed at addressing a specific issue related to coupons, and did not signal any change in the bank's currency policy.
Reuters
19-05-2025
- Business
- Reuters
Brazil's government lifts 2025 GDP forecast, nudges inflation outlook higher
BRASILIA, May 19 (Reuters) - Brazil's Finance Ministry on Monday nudged its growth forecast higher and lifted its inflation projection for this year, according to fresh estimates from its economic policy secretariat. Gross domestic product (GDP) is now seen expanding 2.4% in 2025, up from the 2.3% seen in March, while the 2026 forecast was kept at 2.5%. Meanwhile, consumer prices are expected to rise 5.0% this year and 3.6% next year, compared with previous estimates of 4.9% and 3.5%, respectively. The upward revision of the 2025 GDP projection was related to a higher economic growth outlook for the first quarter, and to raised predictions of agricultural production in the year, according to the secretariat. Brazil's central bank hiked the benchmark interest rate to 14.75% earlier this month, its highest level in nearly two decades, with policy makers saying "significantly contractionary" policy would be needed for a prolonged period to return inflation to target. Guilherme Mello, the economic policy secretary at the Finance Ministry, told journalists in Brasilia that monetary policy has indeed been impacting the government's projections. He said a slowdown in economic activity is expected for the second half of the year, mostly on the back of higher rates, with effects already seen in cyclical segments of the economy. Brazil confirmed its first outbreak of bird flu on a commercial farm on Friday, triggering a series of poultry export restrictions. Mello said it was too early to gauge the economic impact.
