BRASILIA (Reuters) -Brazil’s central bank chief Gabriel Galipolo on Monday highlighted what he called unmistakable signs that Latin America’s largest economy remains strong, citing the heated labor market and the current account deficit.
Speaking at an event hosted by the Fernando Henrique Cardoso Foundation, Galipolo said the current account deficit was a textbook sign of a booming economy and that questioning the strength of the job market would be “data denial”.
He said current inflation remains far from the official 3% target, stressing that meeting it is a commitment of policymakers, as the 1.5-percentage-point tolerance band on either side is meant only to absorb shocks.
Galipolo also noted that services inflation remains at a level inconsistent with meeting the inflation goal.
Brazil’s central bank kept interest rates unchanged last month at a near 20-year high of 15% for a second consecutive meeting, following an aggressive tightening cycle that had raised the benchmark rate by 450 basis points to curb inflation.
Galipolo emphasized that the central bank has repeatedly signaled it expects to keep rates steady for a “very prolonged period”, and that unanchored market inflation expectations relative to the target remain a major source of discomfort shared by all members of the rate-setting committee.
(Reporting by Marcela Ayres; editing by Mark Heinrich)
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