Brazil Central Bank Head Indicates Consistent Monetary Easing Strategy

Brazil's central bank chief, Roberto Campos Neto, emphasised a commitment to a "sustainable" easing strategy, aiming for 50-basis-point interest rate cuts at each meeting, considering the current economic conditions.

Highlighting the need to evaluate this strategy regularly, Campos Neto pointed out that market indicators reflect a perception of continued monetary easing, a crucial aspect for policymakers.

Following nearly a year of maintaining rates at a peak to tackle high inflation, the central bank began an easing cycle in August, reducing rates by 200 basis points to 11.75 per cent. Campos Neto hinted at a consistent path, with plans for further 50 basis point reductions in the upcoming policy meetings. Looking into 2024, he aimed to drive borrowing costs to their lowest feasible level and achieve inflation within the target range.

Campos Neto expressed positivity regarding the economic outlook, foreseeing a 1.7 per cent growth in 2024 following a 3.0 per cent expansion this year. He highlighted potential contributors, such as the government's approval of tax reforms and revenue-increasing measures, alongside a slight improvement in the external economic scenario. Overall, the central bank governor stressed the importance of maintaining low-interest rates to solidify ongoing economic stabilisation endeavours.