The approach currently adopted by Brazil’s central bank of operating with caution amid rising uncertainties, which includes the U.S.-Israeli war on Iran, has paid off, Nilton David, the bank’s monetary policy director, said on Wednesday.
Speaking at a JPMorgan event in Washington, David said the central bank’s approach means that it does not take action based on a single piece of data, but has the calm to assess the construction of all economic indicators available.
After months of holding interest rates at a near two-decade high of 15% to curb inflation, Brazil’s central bank began an easing cycle in its March meeting by cutting the benchmark Selic rate in 25 basis points, a move markets widely saw as cautious.
David said the bank has entered the easing cycle to calibrate the level of interest rates, adding that policymakers aim to keep the monetary policy at a restrictive stance, as they remain committed to bringing inflation back to the 3% target.
Brazil’s monetary authority also is ready to act in any scenario that may come up, the director said, noting policymakers have seen signs that the current monetary policy is working.
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