Market disruption could push Brazil’s rise cycle more than 12.75%, central bank chief says by Reuters

© . FILE PHOTO: A man walks outside the headquarters of the Central Bank in Brasilia, Brazil, March 22, 2022. REUTERS/Adriano Machado By Marcela Ayres BRASILIA () – Roberto Campos Neto, head of Brazil’s central bank said on Friday that ongoing monetary tightening is likely will end up with benchmark rates of 12.75% unless unforeseen market disruptions change policymakers’ flight plan, which he deems unlikely. Speaking at the Centenary Conference of the Central Reserve Bank of Peru, Campos Neto took a more direct stance after noting Thursday that a further rate hike in June was not the most likely scenario. Earlier this month, the central bank raised interest rates by 100 basis points to 11.75%, pointing to another hike of the same magnitude in May to curb persistent double-digit inflation in Latin America’s largest country. “We started the walking process a long time ago, we think we will most likely end up at 12.75%, which puts interest rates in a restrictive camp for Brazil,” he said. According to Campos Neto, the door was left open for a possible tariff adjustment in June due to “very high uncertainty” about the extent of the crisis following the Russian invasion of Ukraine, which led to inflationary pressures with a rise in commodity prices. But he stressed that a policy reassessment would only happen if the conflict escalated “a lot” or if an unforeseen market disruption sparked a new wave of uncertainty. “At the moment we don’t think this is the most likely outcome,” he added, stressing that a spike in inflation is already on the radar. He said consumer price growth will peak in April, reaching 11% over the 12-month period by then. Inflation in the 12 months to mid-March climbed to 10.79%, official data showed on Friday, surpassing market expectations and prompting some analysts to revise their forecasts for the coming months. Disclaimer: Fusion Media would like to remind you that the data on this website is not necessarily real-time or accurate. All CFDs (Stocks, Indices, Futures) and Forex prices are not provided by exchanges but rather by market makers, and therefore prices may not be accurate and may differ from the actual market price meaning prices are indicative and not suitable for trading purposes . Therefore, Fusion Media does not bear any responsibility for any trading losses that you may incur as a result of using this data. Fusion Media or anyone associated with Fusion Media accepts no liability for any loss or damage resulting from reliance on any information, including data, quotes, charts and buy/sell signals on this website. Be fully informed about the risks and costs associated with trading the financial markets, it is one of the riskiest forms of investment possible.

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