The director also said he was "relatively optimistic" about the Brazilian currency. He acknowledged that the real has benefited from high domestic interest rates but stressed that the commodities boom is also helping the country, with foreign investors returning to the markets. (Reporting by Marcela Ayres Editing by Sandra Maler)
(Adds further comments from director)
BRASILIA, Feb 8 (Reuters) - Brazil's central bank will
only begin cutting rates when the conditions are right, the
bank's Monetary Policy Director Bruno Serra said, a robust
defense of the bank's performance amid criticism from President
Luiz Inacio Lula da Silva.
"We will have a cycle of monetary easing at some point in
the future, when conditions allow," he said at an event hosted
by the Repensar Macae municipal business movement.
Serra, whose term expires at the end of the month, said the
benchmark interest rate Selic is at 13.75% because it is
"technically adequate", despite the repeated protests from Lula
that rates should be lower.
He also emphasized that the rate-setting committee that held
the key rate steady at its current level at the last monetary
policy meeting, was the same one that cut it to a record low of
2% when it was deemed necessary due to the conditions imposed by
the pandemic.
Serra defended the central bank's autonomy, underscoring
that the political cycle does not influence monetary policy
decisions, and added that Brazil's exchange rate benefited this
past year from not swinging wildly amid presidential elections
as happened in 2018.
Following the leftist president's indication that inflation
targets in Brazil should be higher, Serra stated that they need
to be credible.
"When agents have doubts, whether because it (inflation
target) is unattainable or because it can be discussed, it makes
the job difficult," he said.
Serra recognized positive signs for inflation marginally,
but emphasized that de-anchoring inflation expectations were
decisive for the bank's latest call to hold rates. He added that
monitoring this will be key for policy decisions in the coming
months and quarters.
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