Slow and gradual convergence of inflation to the target bothers the BC, says Galípolo
Brazil‘s Central Bank is “uncomfortable” with the slow pace of inflation’s descent toward its target, President Gabriel Galípolo said Wednesday. While acknowledging diminished market skepticism about the effectiveness of monetary policy, Galípolo noted the gradual convergence is a source of concern for the BC.
“I think this skepticism has lost a lot of weight and the data has shown a progression, albeit slow and gradual, towards convergence of the target. the slow and gradual process, of course, is quite uncomfortable for the BC,” Galípolo stated during an event hosted by Bradesco bank.The comments come as recent data indicates progress in controlling inflation. The Broad Consumer Price Index (IPCA) showed a 12-month inflation rate of 4.68% in October, down from 5.17% the previous month, according to data from the IBGE. Inflation expectations, as measured by the Focus Bulletin, have also declined in recent months.
Galípolo also pointed out that the slower approach mitigates the risk of a sharp economic downturn triggered by aggressive monetary tightening.