(Reuters) -Brazil’s central bank continues to see signs of resilience in the country’s economy despite indications of an overall slowdown, its governor said on Monday, adding that the authority would maintain a data-driven approach to monetary policy.
Gabriel Galipolo’s remarks came as the bank earlier this month held interest rates at a near two-decade high of 15% for a second straight meeting, signaling it would keep them unchanged for a long time in a bid to tame persistent inflation.
Speaking at an event hosted by Itau BBA, Galipolo emphasized that the central bank is monitoring whether interest rates are at a sufficiently restrictive level to bring inflation back to its 3% target.
He noted that Brazil’s job market has demonstrated “great resilience, while a current account deficit points to heated demand.
“There is still a lot of effort to be made by the central bank,” Galipolo said, adding that keeping interest rates high for an extended period will be more difficult than having raised them.
“We’re going to have to grit our teeth for a while. That will be the bigger challenge,” he said.
He mentioned that both the bank’s own projections and the expectations of various economic agents suggest that inflation will remain above the goal over the relevant horizon, which currently extends to the first quarter of 2027.
Galipolo also pointed out that current inflation is above target, adding that all these variables “require us to remain vigilant, calm, and persistent.”
Even so, the governor said that the bank’s data-dependent approach has proven effective so far.
(Reporting by Marcela Ayres; Editing by Gabriel Araujo)
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