Copom will be ready if inflationary shock demands it, says Campos Neto

Central Bank President Roberto Campos Neto stated that the Copom (Monetary Policy Committee) will be ready to adjust the size of its tightening cycle in the event of larger or more persistent inflationary shocks than expected.

In a presentation at meetings with investors organized by Bank of America and XP Investimentos, Campos Neto said that the Copom “assesses that the moment requires serenity to assess the size and duration of the current shocks”, and that “it will persist in its strategy until the process of disinflation and the anchoring of expectations around its goals is consolidated”.

He, who is in Washington for IMF (International Monetary Fund) and World Bank meetings, also repeated previous predictions that the Central Bank will raise the Selic rate by 1 percentage point at its next meeting, from the current level of 11.75%. .

“The Copom emphasizes that its future monetary policy steps may be adjusted to ensure the convergence of inflation to its targets and will depend on the evolution of economic activity, the balance of risks and inflation expectations and projections for the horizon relevant to monetary policy” , he said.

Campos Neto had already recently indicated that the BC would be open to analyzing its monetary policy scenario, after the announcement of the highest rise in the IPCA (Broad Consumer Price Index) for March in 28 years fueled market bets that the tightening started in 2021 will not end next May, as the mayor indicated at the end of last month.

In the presentation released by the BC, Campos Neto said that the supply shock of the conflict in Ukraine has the potential to exacerbate inflationary pressures in both emerging and developed countries, and said that the short-term impact of the energy crisis resulting from the war involves high challenges for transition to a green economy.