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2025-12-16 19:07:28
[Prolonged Tightening Warnings and Inflation Concerns Force Brazil's Central Bank to Maintain Hawkish Stance] ⑴ The Central Bank of Brazil reiterated in its meeting minutes that inflation drivers remain unfavorable, and the central bank will continue to monitor the pace of economic activity. ⑵ At the same time, the central bank will closely monitor inflation expectations, exchange rate transmission effects, risk balance, and the dynamic changes in current inflation itself. ⑶ Based on its assessment of the current situation and prospects, the central bank believes that the current circumstances require monetary policy to maintain a significantly tight stance for an extended period. ⑷ The minutes emphasized that the previous firm interest rate hikes were necessary to address the deteriorating inflation situation at the time. ⑸ The latest inflation data continues to show better dynamics than expected at the beginning of the year, with service sector inflation, while more resilient, showing signs of slowing. ⑹ The central bank believes that the current tight monetary policy has played a decisive role in the observed decline in inflation. ⑺ The labor market remains very tight, but initial signs of slowing have emerged. ⑻ Domestic economic activity, as expected, continues on a moderate growth trajectory, providing room for the central bank to maintain its tight stance.
