Galípolo says that it is already possible to notice a “sharp disinflation process” in Brazil

The president of the Central Bank, Gabriel Galípolo, stated this Thursday, 23, that expectations are still outside the target, but that there is a process of slowing down inflation. He then reiterated that, to produce this convergence, the current scenario demands that the interest rate remains at a high and restrictive level for an extended period. He participated in the Indonesia Brazil Economic Forum, promoted by ApexBrasil, in Jakarta, Indonesia.

Galípolo also said that Brazilian inflation is relatively controlled, but stressed that the Central Bank is “quite bothered by the fact that it is not yet on target”.

“Inflation and expectations remain outside the target. This is a very uncomfortable point for the Central Bank, but we are talking about inflation that is in a process of reduction and return to the target, due to a Central Bank that has always shown itself to be very diligent and timely in combating any type of inflationary process. As I mentioned, expectations are still outside the target, but in a process of slowing inflation”, he stated.

The central banker detailed that there was a spike in inflation at the beginning of the year, associated with a process of exchange rate devaluation and a very heated labor and consumption market, but considered that the core food inflation is gradually falling. “When we look at this type of meter, which is a seasonally adjusted quarterly average, we notice a very accentuated and rapid disinflation process, already returning inflation to levels closer to the target, when we compare it with what we had at the beginning.”

Galípolo also emphasized that this process occurs in a scenario in which the Brazilian economy goes through a cycle of continuous growth, with systematic reviews of economists’ forecasts for economic growth. He also highlighted that in 2025, the country should record its best economic well-being index since the inflation targeting system began.

“We have an inflation level that, despite being outside the target, requires the Central Bank to maintain an interest rate at a high and restrictive level for a prolonged period so that we can produce this convergence, but managing to combine a low level of unemployment, positive growth and inflation that is, looking at historical levels, within a low level, when we compare it with historical levels in Brazil.”