BRASILIA (Reuters) -Brazil’s central bank is still assessing whether the benchmark interest rate at 15% is appropriate to bring inflation down to its 3% target, economic policy director Diogo Guillen said on Monday.
Policymakers kept rates unchanged in late July at a near 20-year high after 450 basis points in hikes since last September. They signaled borrowing costs would remain steady for a “very prolonged” period.
Speaking at an event hosted by Warren Investimentos, Guillen stressed that the guidance signaled more rate holds.
“We are still evaluating whether this is the appropriate rate to bring inflation to target,” he said. “Once that rate is determined, it will remain unchanged for a very long period.”
Guillen acknowledged recent downside surprises in consumer prices readings, but said the key issue with inflation is it remains above target, with expectations and projections also unanchored from the official goal.
Prices were up 5.23% in the 12 months through July, down from 5.35% in the previous month and below forecasts.
Guillen emphasized economic growth is losing steam, as expected following the central bank’s tightening stance.
(Reporting by Marcela Ayres; Editing by Chris Reese and Kylie Madry)
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