"The disinflation process is slower, hence it requires patience and serenity. The monetary policy should stay restrictive," he was quoted as saying.
Guillen's remarks come after President Luiz Inacio Lula da Silva's government presented its first nominations for two top positions in Copom. Since taking office in January, Lula has blasted interest rates held steady at a 13.75% cycle-high since September, despite cooling inflation.
The executive secretary of the Finance Ministry, Gabriel Galipolo, who has been nominated for Monetary Policy director, said that recent fiscal efforts undertaken by the government are creating a more favorable environment for monetary policy, emphasizing that market expectations point to interest rate cuts in the second half of the year.
Guillen said he expected to have a deep and technical debate with Galipolo, and highlighted his concern about inflation expectations deviating from official targets, stating that this "requires a tighter monetary policy stance" from what the central bank saw at the end of last year. "We are observing unanchored expectations, but if they remain unanchored for a long time or become further unanchored, they can change the price adjustment dynamics. There is also resilience in service sector inflation," he said.
Lula's nominations still need to be approved by the Senate. The president will eventually replace all independent central bank board members, gaining a majority after December 2024.
(Reporting by Marcela Ayres; Editing by Andrea Ricci)
