Data release: 10/26/2022
As expected, COPOM (Monetary Policy Committee of Banco Central do Brasil) kept the interest rate unchanged at 13.75%.
Members did not change the balance of risks, however, there was a highlight on the greater sensitivity of financial markets to fiscal policies, including advanced countries – which is a message about the relevance of investment grade to the next government leader, to be chosen this week.
They acknowledged the more moderate pace of activity, but concerning the inflation, the committee was more hawkish than expected, by not recognizing the fall trend of the core items’ prices. According to them, the recent improvement is concentrated in volatile items, while the core remains outside the target range goal.
Thus, COPOM has increased the inflation forecast to 2023 from 4.6% to 4.8%, and to 2024 from 2.8% to 2.9%. Regarding the relevant range, which covers the second quarter of 2024, they also raised the projection from the last Quarterly Inflation Report (3.1%) to 3.2%.
Finally, the committee maintained their stance on the possibility of returning to a monetary adjustment cycle if necessary.
