Brazil’s central bank has signalled that it is setting a high bar for raising interest rates, despite identifying several risks behind a rebound in inflation.
The bank pointed to potential shocks from oil prices, El Niño weather conditions, the labour market and foreign exchange markets as factors that could add to inflationary pressure.
Its assessment suggests that those risks will not automatically lead to higher rates, with policymakers indicating that a further tightening of monetary policy would require a significant deterioration in the inflation outlook.
