Inflation expectations have been worsening in Brazil, says Campos Neto

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Reuters – The president of the Central Bank, Roberto Campos Neto, said this Friday that expectations for inflation in Brazil have been worsening, and highlighted that the monetary authority is “following this very closely”.

At an event promoted by the Young Presidents’ Organization, Campos Neto stated that market projections for 2025 inflation have started to worsen recently, a movement that the BC is trying to understand.

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“Inflation expectations have been getting worse, both medium and long expectations have been getting worse,” he said.

The Central Bank’s most recent Focus Bulletin, which captures estimates from market agents, points to inflation of 3.60% in 2025, against 3.56% predicted a week earlier and 3.51% a month earlier. The inflation target is 3%, with a tolerance margin of 1.5 percentage points.

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For the BC president, this change can be explained by perceptions related to fuel prices, exchange rate levels and interest levels in the United States.

Campos Neto said that inflation in Brazil remains on a downward trend and highlighted better-than-expected March data, but considered that the “last mile” of disinflation is more difficult.

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Speaking shortly after the IBGE showed that the IPCA-15 rose less than expected by the market in April, the BC president said that the data seemed positive, but better analysis was needed to see the details.

Campos Neto considered that underlying services inflation remains at a high level, proving more resilient in items more linked to the labor market. He expressed concern about the issue, highlighting that strong employment data could impact service prices.