Selic will not react to high frequency data, says Campos Neto


The president of the Central Bank, Roberto Campos Neto, repeated again that the BC will act to control the advance of inflation and that measures are planned. But he claimed that the Monetary Policy Committee (Cup) will not act on each new “high frequency” change.

Campos Neto participated in a panel this Tuesday, 14, at Macro Day 2021, BTG Pactual bank event.

“Saying that we are going to do what needs to be done to reach the goal means that we are going to take Selic where it needs to go, but it does not mean that we will always react to high frequency data,” he said.

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Campos Neto stated that the BC is monitoring the components of the inflationary process and changes in the short term, but that “changes in the flight plan” will not always occur, whose focus is on a “longer horizon”.

The IPCA, the main Brazilian inflation index, was 9.68% in the 12-month period up to August. Brazil must end 2021 with the worst inflation since 2015, despite unemployment still at around 14%.

Campos Neto’s speech takes place days before the next Copom meeting, scheduled for September 21st and 22nd.

The Selic rate is currently at 5.25%, after having started the year at a record low of 2.0%, which made Brazil one of the countries in the world that raised the most interest rates recently.

Market projections already point out that the interest rate may end 2021 close to 8%, and new increases made by the Copom are expected for the next meetings.

Offer shock

In his speech, the BC president also spoke about the supply and demand shocks that have caused part of inflation in Brazil and abroad.

Highs on the services front around the world were already expected with the economic reopening after vaccination, but in addition, inflation continues to be pressured globally by supply shocks, with the production of goods failing to meet demand.

The offer of semiconductors, an important component of electronic products, is one of the biggest examples, with prices breaking records.