Brazil’s Central Bank President says inflationary pressure persists

The president of the Central Bank of Brazil, Roberto Campos Neto, said on Wednesday, 12, that although inflation in Brazil slowed down in March to 0.71% (from 0.84% in February), pressures to increase prices remain due to relatively strong demand.

The statement was made during a closed meeting with investors organized by XP in Washington, and the Central Bank (BC) released the video on Wednesday.

“Inflation has fallen, but pressures remain.”

“The demand component of inflation in Brazil is relatively strong,” said Campos Neto at the meeting.

He also explained that between August and November, there was a slowdown in long-term inflation pressures and expectations of falling interest rates.

However, from November on, this scenario deteriorated, possibly due to the new policy that then-president-elect Lula would adopt to end the public spending cap.

“Long-term inflation expectations were anchored in 2022, but since November, it started a deterioration process,” added the BC’s president in his presentation to investors.

According to BC’s president, since February, the market has returned to projecting a reduction in the Selic rate.

The latest Focus Bulletin, which captures the projections of market analysts, shows that inflation expectations continue to worsen, even at longer horizons.

The estimate for the IPCA in 2024 went from 4.02% a month ago to 4.14% this week.

For 2025, the figure went from 3.8% to 4%.

The Monetary Policy Committee (Copom) keeps the economy’s interest rate high to control demand inflation.

Currently, the annual interest rate is at 13.75%, which is the reason for a campaign against Campos Neto, headed by Lula and swelled by allies from the PT and other leftist parties.

With information from Revista Oeste