Inflation down to 4.5% target a likelier scenario
The Central Bank has reaffirmed its pledge to have the inflation within the target next year 
The Central Bank's Committee for Monetary Policy, or Copom, stated that the scenario for bringing the inflation to the 4.5% target by 2016 has grown stronger. The announcement is found in the minutes from the last committee session, made public Thursday (Aug. 6).
The Central Bank has reaffirmed its pledge to have the inflation within the target next year, even though projections this year suggest the target should be exceeded. The National Broad Consumer Price Index (IPCA) for 2015 has been estimated at 9%. The inflation target, in turn, stands at 4.5%, with an upper limit of 6.5%. The committee attributes the inflation hike to the realignment of domestic prices against international ones and of prices administered compared to free ones.
“Such price adjustments drive the inflation up in the short run, and tend to keep it up throughout 2015, which requires determination and perseverance in preventing its transmission to longer terms,” the Central Bank points out.
In the view of committee members, lifting interest rates will bring the inflation back to the target by the upcoming year.
“The progress made while curbing inflation – as made visible by the [promising] indicators for medium- and long-term estimates – shows that the monetary strategy has taken the right direction,” the financial institution reports in the meeting minutes.
The committee believes the remaining risks for Copom's inflation forecasts to safely reach the target by the end of 2016 are in keeping with the latest increases in the benchmark Selic. The committee notes, however, that it must remain “on the watch for significant deviations in inflation estimates.”
On July 29, Copom raised the Selic for the seventh time in a row. The benchmark rate surged by 0.5% percentage points to 14.25% per annum, bringing it back to its 2006 level.
According to the committee, the upward trend in domestic activity this year is lower than the potential rate. “Investment, in particular, has been driven down chiefly by non-economic events [corruption probes conducted by the Federal Police], and private consumption shows signs of more moderation, in line with recent data on credit, employment, and income,” Copom added. However, in the judgment of the committee, “after a necessary period of adjustments, the pace of activity tends to speed up as confidence builds up among companies and families.”
Translated by Fabrício Ferreira
Fonte: Inflation down to 4.5% target a likelier scenario
