In a scenario marked by expectations about the direction of monetary policy in the United States, all attention is focused on data on the behavior of the American economy, in the hope of a signal about the beginning of cuts in Fed funds. The president of the Central Bank, Roberto Campos Neto, stated this Wednesday (03) that the numbers from April 10th are important to define the Fed’s next steps. He refers to the CPI – American inflation data. Campos Neto, speaking during a Bradesco BBI event, reiterated the challenging scenario around the world, cited persistent services inflation, and denied that the Central Bank, with its exchange rate intervention, had tried to contain the dollar.
“We came with a disinflation process, which caused a halt, some people call it the last mile, the last kilometer. And at this event we had a month and a half ago, some people said that the last mile has already been completed, and I said that I didn’t think so. I think that in the minds of central banks, especially the Fed, this is not true”, said Campos Neto. The BC president added that core inflation fell, but now at a slower rate and, in some places, it has stopped. “In others, it started to rise a little. We also see some emerging countries with similar dynamics.”
“In the USA, we see that headline inflation has started to plateau around 3.2%. The number that will be released on April 10th is very relevant, because the Fed needs to have a narrative about the disinflation process, and it has been left with a greater degree of uncertainty, because some things that were identified as disinflation factors are not being showing so much deflation: labor, real estate, energy has risen a little again, so that will be a challenge too”, he points out.
According to the BC survey, almost all developed countries expect an equal drop in interest rates, unlike the scenario in Latin America. He considered it important to emphasize that Brazil has, over the last few years, been able to work with lower real interest rates, although still high, and states that the disinflation process is “more or less in accordance with what the authority understands ”.
During his participation in the event, the president of the BC also commented on the intervention made in the exchange rate the day before, with the sale of US$ 1 billion in exchange rate swap contracts. “Our intervention had nothing to do with the movement of the exchange rate, we always say that the exchange rate is floating. It is important for the exchange rate to be floating, because it works as an element that absorbs shocks and then redistributes, let’s say, resources more efficiently.” According to Campos Neto, the reason for the intervention was the expiration of the NTN-A3. “We thought it was big, that there could be some dysfunction on the day and that’s why an intervention was carried out. We put this in the text of the intervention, a lot of people didn’t understand.”
