MNI BRIEF: BCB Assessing Whether Restrictive Stance Is Enough

Central Bank of Brazil Governor Gabriel Galipolo said Monday that monetary policy is reaching a very restrictive level, but the board is still assessing whether it will be contractionary enough to bring inflation to the target.

"We have entered a restrictive level, and we can say that with great confidence, but we are still feeling our way to understand whether the level we are moving toward will be contractionary enough to bring inflation down to target," he said at the J. Safra Macro Day 2025 event in Sao Paulo.

He stressed that there is a desire among board members to normalize monetary policy in the future, but noted that, despite being highly contractionary, it has not slowed economic activity as anticipated.

The BCB raised interest rates by 100 basis points in March and signaled a smaller hike in May. (See MNI INTERVIEW: BCB Might Cut Sooner as Activity Slows - Serra)