SAO PAULO (Reuters) – The recent drop in inflation expectations allows the Brazilian central bank to pay more attention to the country’s weak economy, central bank president Ilan Goldfajn told newspaper Valor Economico in a report published on Friday.
Goldfajn said the bank has not been wrong to cut interest rates at a slow pace because it anchored expectations. In other countries that managed to lower inflation expectations, such as Mexico and Israel, interest rates fell and never returned to their previously high levels, Goldfajn said.
The interview was published one day after the central bank cut its forecast for 2017 economic growth to 0.8 percent from 1.3 percent. The move was interpreted by market analysts as a sign that policymakers are ready to step up monetary easing to pull the economy out its worst recession in decades.
The central bank’s press office did not respond to phone calls and a e-mail request to comment on the Valor report.
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