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Global Markets News
In the minutes of the meeting held between March. 21-22, when the rate-setting committee known as Copom kept the benchmark rate at 13.75%, the central bank noted that the Finance Ministry's commitment to implementing fiscal measures and the reinstatement of fuel taxes have reduced the upside risk on short-term inflation. However, policymakers expressed concern about inflation expectations diverging from the targets in the longer term, indicating that this issue, together with the risk of a more abrupt reduction in domestic and global credit granting affecting economic activity, was central to their policy decision debate. "The monetary policy conduct, at this moment, requires serenity and patience to incorporate the inherent delays in the inflation control through interest rates and, therefore, to reach the goals in the relevant monetary policy horizon," it said. Policymakers reiterated that they would not hesitate to resume hikes if necessary when they kept the Selic rate at its highest level in six years last
Wednesday, despite intense pressure from the new government of
President The decision triggered a fresh wave of criticism from leftist Lula, frustrating part of the market expectation about the possibility of monetary easing ahead amid cooling annual inflation, credit deceleration, economic slowdown, and banking turmoil abroad. In the minutes, policymakers said that there is no
mechanical relationship between the convergence of inflation and
the presentation of an awaited fiscal framework by the
government. Still, they stressed that a credible new rule "might
result in a more benign disinflationary process through its
effect on the expectations channel."
(Reporting by
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