Brazil central bank says 2027 slowdown key to inflation convergence

BRASILIA, Sept 24 (Reuters) - Brazil's ‌central bank ​sees ​a slowdown in economic activity next year as essential for inflation to converge to its 3% ‌target, a senior official said on Thursday.

• "The output-gap ⁠opening embedded in our 2027 forecast is essential for prices to ‌converge in our models," acting ‌Economic Policy Director Paulo Picchetti said during a press conference.

• His remarks came after the bank earlier on Thursday ​forecast gross domestic product growth of just 1.4% in 2027, well below the 2.3% expansion projected by ⁠the government.

• Speaking at the same event, central bank governor Gabriel Galipolo said policymakers ​are approaching data with "humility" given the unusually high degree of uncertainty surrounding the economic outlook.

• Galipolo ​said the central bank must avoid ‌relying on a "false sense of precision," including when assessing whether its forecast of 3.1% annual ⁠inflation from the second quarter of 2028 onward constitutes convergence to the 3% target.

• "This is a central bank that does ⁠not overreact to data points to avoid creating unnecessary volatility," Galipolo said.

• ​Still, he said signs that economic activity is slowing have become increasingly evident.

• Commenting on the central bank's planned macroprudential measures, Galipolo ‌said policymakers aim to curb aggressive lending practices and tackle cases of predatory credit.

• "Credit card ‌delinquency stands at 65%. A product with a delinquency ⁠rate that high has ‌a design flaw," he ​said, without elaborating on the new rules.

(Reporting by Marcela Ayres; Editing by Isabel Teles and Gabriel ‌Araujo)

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• CIA did not warn France about possible Russian drone attacks, Macron says
• US senators delay effort to permanently ban Chinese cars
• Study reveals evolutionary history of bats, dating back 65 million years