(Reuters) -Brazil’s central bank is not currently discussing potential interest rate cuts, director Diogo Guillen said on Friday, reaffirming that policymakers remain focused on bringing inflation back to target over the relevant horizon.
“That seems like a very distant debate,” he said at an event hosted by Barclays in Sao Paulo, adding it would be “far too premature” to talk about what might lead the bank to ease borrowing costs.
Earlier this month, the central bank raised its benchmark interest rate by 25 basis points to 15%, a near two-decade high, and signaled it expects to hold it steady for a “very prolonged” period.
Guillen said the pause was announced to assess whether the cumulative 450-basis-point increase since September had been enough.
“As the cycle evolves, you reach a more contractionary interest rate level, which also allows more time to observe the lagged effects (of monetary policy),” he added.
Guillen also emphasized that the central bank is targeting the midpoint of the inflation goal, set at 3%, and aims to reach it within the relevant monetary policy horizon, which currently extends to the fourth quarter of 2026.
Brazil’s economy has “undoubtedly” shown resilience, but there are signs of a slowdown in growth, he added.
Guillen said that the debate over the reasons behind recent economic strength involves several hypotheses involving stronger consumption, credit expansion, labor market dynamics and the effects of social benefits.
(Reporting by Marcela Ayres; Editing by Mark Porter and Gabriel Araujo)
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