Keeping interest rates high would be appropriate, but you have to be reasonable, says BC director

The director of Monetary Policy at the Central Bank, Bruno Serra, said this Monday (16) he preferred a scenario of interest rates stopped at a high level for longer to reach the inflation target, but considered that this is not always possible. , amid market speculation about the BC’s next moves to fight inflation.

In an event promoted by Goldman Sachs, Serra stated that if he could choose to extend the Selic maintenance period at a higher level, this would be an appropriate option, stressing, however, that the decision must be reasonable and consider other factors, such as economic activity.

“We did the job faster than our peers, we thought we could stop [o aperto] in that meeting [de maio]; the scenario got worse, we had to extend the cycle, give a signal of probable extension of the cycle, but from now on I think time will tell”, he said.

About two weeks ago, the Central Bank raised the Selic by 1.0 percentage point, to 12.75% per year, and said that an extension of the interest rate hike is likely with a smaller adjustment at the next meeting, in June. , without specifying whether this would be the last rate increase.

“If I can choose to lengthen the convergence period, extend the maintenance of the Selic at a tight level, high interest rates, and it is possible to deliver the inflation target with this policy, I think it is adequate, but it needs to be reasonable,” he said.

The director explained that so far there have been few signs of a slowdown in activity, but that the risks in this regard are now increasing.

After noting that the interest rate has recently entered a contractionary field, at the end of 2021, he stated that the lagged effects of monetary policy will begin to be felt in the second half of this year, impacting the economy and paving the way for a decline in inflation.

“Going forward, there is a growing risk of monetary policy taking effect and slowing demand,” he said.