The president of the Central Bank, Roberto Campos Neto, stated this Wednesday (3) that inflation and core inflation are falling in most emerging countries, but considered that in some there is already an increase in services inflation. “Some central banks are trying to understand whether there is a relationship between tight labor and service prices,” he added.
Campos Neto’s statement comes two weeks after the Central Bank’s Copom (Monetary Policy Committee) decided to reduce the basic interest rate by 0.5 percentage points, from 11.25% per year to 10.75%. It was the sixth cut in a row, following the sequence of drops that began in August 2023.
The assessment considered that the Selic rate is the main instrument of monetary policy to determine inflation in an economy. This happens because higher interest rates make credit more expensive, reduce the willingness to consume and encourage new investment options by families.
Inflation in Brazil ended 2023 at 4.62%, according to the IPCA (Broad National Consumer Price Index), the official measure. In February, the indicator accelerated again and stood at 0.83%, an increase of 0.41 percentage points compared to January, when it changed 0.42%.
Campos Neto pointed out that a study carried out in the United States indicates that there is no relationship between the variables in the current country, but said that the reality in the emerging market could be different.
The BC president considered that when analyzing global inflation, there is a more complicated figure of core inflation at the end. Cores in some countries still fall, but at a slower rate. In others, however, they plateaued, and in some they rose a little again.
He reiterated that the disinflation process was driven by food and energy prices. He highlighted the fact that this process took place in a scenario of full employment.
However, according to the central banker, “the global inflation scenario has become more difficult in the last month and a half.”
Campos Neto participates in the 10th Brazil Investment Forum, organized by Bradesco BBI, in São Paulo.
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