Central Bank: Labor market is the most “exuberant” in three decades
Brazil’s Central Bank President Gabriel Galípolo said the labor market in Brazil is “the most exuberant” in the last three decades. He also said, however, that, based on market expectations, inflation is not expected to reach the target until at least 2028.
The statement was made on Monday (Oct. 6) during a lecture at the Fernando Henrique Cardoso Institute in São Paulo.
“The time series suggests we may be at full employment. We have very strong data on what has been happening [in this regard]. The wage bill and real average income have risen sharply in this direction. So I think it’s hard to say we don’t probably have the most exuberant labor market we've seen in the last three decades,” said the Central Bank president.
Galípolo also said that, for the country to continue growing without inflationary pressure, this growth must be driven by increased productivity – “productivity that allows us to be sustainable, [so we can] enjoy longer-lasting growth,” he added.
He reiterated that the rise in interest rates is due to inflationary pressures. “We know that 15 percent is a high interest rate, but look at the situation we had in April – 57 percent of the items that make up the [consumer price index] IPCA were more than double the inflation target,” he said.
“We do not see inflation at the target in any of the horizons, not even by 2028, according to Focus readout expectations. It is obvious that the Central Bank has its own projections. And we incorporate all these projections. Within Focus expectations and within our projections, this is a very uncomfortable indicator,” he added.
The Focus market readout is a weekly survey conducted by the Central Bank with financial market agents on inflation behavior.
