{"id":96258,"date":"2025-10-17T11:55:08","date_gmt":"2025-10-17T14:55:08","guid":{"rendered":"https:\/\/murray.adv.br\/?p=96258"},"modified":"2025-10-17T11:55:08","modified_gmt":"2025-10-17T14:55:08","slug":"uncertainties-led-to-monetary-tightening-central-bank-director-says","status":"publish","type":"post","link":"https:\/\/murray.adv.br\/en\/uncertainties-led-to-monetary-tightening-central-bank-director-says\/","title":{"rendered":"Uncertainties led to monetary tightening, Central Bank director says"},"content":{"rendered":"
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Monetary policy head Nilton David signals hawkish stance, arguing that scrutiny of all data sets is required to ensure convergence to 3% inflation target<\/strong><\/em><\/h6>\n<\/div>\n<\/div>\n
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10\/17\/2025\u00a0<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n

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Economic uncertainty<\/strong>\u00a0and unchecked\u00a0inflation expectations<\/strong>\u00a0prompted Brazil\u2019s Central Bank to keep borrowing costs\u00a0at a higher level than in previous cycles<\/strong>, said\u00a0Nilton David<\/strong>, the monetary authority\u2019s monetary policy head.<\/p>\n<\/div>\n

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Mr. David spoke at an event hosted by\u00a0UBS BB<\/strong>\u00a0in Washington, D.C.\u00a0The Selic benchmark rate currently stands at 15% per year.<\/span><\/p>\n<\/div>\n

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\u201cThe Central Bank decided [in July, when it halted the tightening cycle<\/a>] that it had already accumulated enough rate hikes to place us at a more restrictive level of interest rates and monetary conditions than would be prescribed under normal circumstances,\u201d he said. \u201cWhy set the Selic at 15% and keep it there? Because inflation expectations were unanchored, and because there are many more layers of uncertainty in this cycle than in past ones.\u201d<\/p>\n<\/div>\n

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According to Mr. David, these \u201ctighter conditions\u201d in monetary policy require a \u201cmicroscopic look\u201d at all sets of data. Only then, he said, will it be possible to assess whether the Central Bank\u2019s stance remains appropriate and whether\u00a0inflation<\/a>\u00a0is effectively converging toward the target.<\/p>\n<\/div>\n

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\u201cThis is the phase we\u2019re in now.\u00a0We believe we need to stay at this level for a fairly prolonged period until we\u2019re convinced that the data are converging toward where we believe they should be,<\/span>\u201d he said.<\/p>\n<\/div>\n

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In public remarks, Mr. David has repeatedly stressed the need for a tighter monetary stance than would be necessary if inflation expectations were anchored, and for a longer period than would be warranted in a less uncertain environment.<\/p>\n<\/div>\n

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At its most recent meeting, when it kept the benchmark rate at 15% per year<\/a>, the Monetary Policy Committee (COPOM) said it would remain \u201cvigilant\u201d and assess whether holding the rate at this level for a \u201cprolonged period\u201d will be enough to bring inflation back to target. The 12-month Extended National Consumer Price Index (IPCA) through September\u00a0stood at 5.17%<\/a>, compared to the 3% target, with a tolerance band of 1.5 percentage points above or below.<\/p>\n<\/div>\n

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The Central Bank director underscored the importance of analyzing the full range of data during this extended period, \u201cbecause the lagged effects are different in each sector\u201d of the economy. \u201cThe data we\u2019ve seen so far are consistent with what we\u2019ve planned up to this point,\u201d said Mr. David, who is in the United States to attend International Monetary Fund meetings.<\/p>\n<\/div>\n

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He also noted that inflation expectations captured by the Central Bank\u2019s Focus survey rose last year but have since fallen \u201cconsistently,\u201d though they remain well above the 3% target. \u201cEven if I\u2019d hoped they would be moving faster than they are, they are moving in our direction and are likely converging toward what we believe will help bring inflation to target,\u201d he said.<\/p>\n<\/div>\n

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In setting the benchmark interest rate, the COPOM focuses on the first quarter of 2027, for which it projects an IPCA rising 3.4%.\u00a0Median market projections from the Focus survey currently point to inflation of 3.9% in 2027 and 3.68% in 2028.<\/a><\/p>\n

*By\u00a0Gabriel Shinohara\u00a0\u2014 Bras\u00edlia<\/p>\n

Source: Valor International<\/p>\n

https:\/\/valorinternational.globo.com\/<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/article>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Monetary policy head Nilton David signals hawkish stance, arguing that scrutiny of all data sets is required to ensure convergence to 3% inflation target         10\/17\/2025\u00a0 Economic uncertainty\u00a0and unchecked\u00a0inflation expectations\u00a0prompted Brazil\u2019s Central Bank to keep borrowing costs\u00a0at a higher level than in previous cycles, said\u00a0Nilton David, the monetary authority\u2019s monetary policy head. […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8106],"tags":[26527],"class_list":["post-96258","post","type-post","status-publish","format-standard","hentry","category-murray-news","tag-uncertainties-led-to-monetary-tightening"],"yoast_head":"\nUncertainties led to monetary tightening, Central Bank director says - Murray Advogados<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/murray.adv.br\/en\/uncertainties-led-to-monetary-tightening-central-bank-director-says\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Uncertainties led to monetary tightening, Central Bank director says - Murray Advogados\" \/>\n<meta property=\"og:description\" content=\"Monetary policy head Nilton David signals hawkish stance, arguing that scrutiny of all data sets is required to ensure convergence to 3% inflation target         10\/17\/2025\u00a0 Economic uncertainty\u00a0and unchecked\u00a0inflation expectations\u00a0prompted Brazil\u2019s Central Bank to keep borrowing costs\u00a0at a higher level than in previous cycles, said\u00a0Nilton David, the monetary authority\u2019s monetary policy head. 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