The Brazilian Central Bank said on Tuesday that a further deterioration in inflation expectations could extend the monetary policy tightening cycle, with its policy behavior remaining a “key factor” in guiding expectations towards the 3% target.
In the minutes of its November 5-6 meeting, when policymakers accelerated the pace of tightening with a 50 basis point hike that pushed interest rates to 11.25%, the central bank noted that recent concerns about rising public spending and the sustainability of the country’s fiscal framework had a significant impact on asset prices and market expectations.
