Brazil's central bank chief stresses data-driven approach to tightening cycle

(Reuters) -Brazil's central bank head stressed on Monday the data-dependent stance of policymakers in their tightening cycle, emphasizing the need for confidence that monetary policy is achieving the desired effects amid heightened uncertainties.

"It is essential to gather sufficient and diverse data to build this level of confidence," said Gabriel Galipolo at an event hosted by conglomerate J. Safra in Sao Paulo.

He highlighted that the central bank does not focus on a single variable, aiming to collect as much data as possible to ensure the monetary tightening is driving inflation toward the target.

Galipolo emphasized that current inflation remains above the 3% official goal, and the domestic economy continues to show "very incipient" signs of cooling.

Brazilian policymakers began tightening in September, so far raising interest rates by 375 basis points to 14.25%.

In March, they signaled a further increase at the upcoming meeting next month, though smaller than the last three, each of which was 100 basis points.

According to Galipolo, the communication issued after the latest policy decision "held up well over the last 40 days," with the same understanding remaining in force.

He stressed policymakers' concerns over current inflation dynamics, unanchored inflation expectations, the lag in monetary policy, and increased uncertainties that require caution.

(Reporting by Marcela Ayres; Editing by Gabriel Araujo)

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