BRASILIA, June 27 (Reuters) - Brazil's central bank signaled on Tuesday that a majority of its policymakers see a possibility of initiating a "parsimonious" rate cut at its next meeting in August, provided that a more benign inflation scenario is consolidated, while a minority adopts a more cautious stance.
Although it adopted a more moderate tone by excluding the possibility of rate hikes from its policy statement, the central bank refrained from signaling monetary easing at its next meeting in August last week, pointing instead to a data-dependent stance.
The communication drew criticism from President Luiz Inacio Lula da Silva, ministers, and some market participants, who expected a notable shift in the bank's tone due to lower-than-expected inflation, a stronger currency, and easing inflation expectations.
The central bank stressed in the minutes that inflation expectations declined slightly, but remain deanchored from official targets, partially due to the questioning about a possible change in future inflation targets, adding that "decisions that reanchor expectations can lead to faster disinflation."
The National Monetary Council, consisting of the Finance Minister, Planning Minister, and central bank governor, will convene on Thursday to confirm the 3% inflation targets for 2024 and 2025, and set the official target for 2026.
Persons:
Copom, Luiz Inacio Lula da Silva, Fernando Haddad, Marcela Ayres, Steven Grattan
Organizations:
Monetary, Finance, Planning, Thomson
Locations:
BRASILIA