Copom Minutes Show Economic Slowdown With No Relief on Inflation

The Monetary Policy Committee released minutes on Tuesday confirming a slowdown in Brazilian economic activity. Cyclical sectors are showing more pronounced moderation. Despite this, inflation remains under pressure and above the target set by the National Monetary Council.

The Central Bank reinforced that the Selic rate must remain at a restrictive level for an extended period. The document highlights that inflation expectations for the coming years remain detached from the 3% target. This scenario requires a more rigorous monetary policy to ensure price convergence.

The labor market has also entered the radar of monetary authorities. The unemployment rate remains at historically low levels. However, real wage growth is outpacing labor productivity, which creates concerns about further inflationary effects.

Fiscal policy is identified as a critical factor for price control. The committee emphasizes that uncertainties regarding the stabilization of public debt hinder the Central Bank's work. Harmony between fiscal and monetary policies is considered essential for economic balance.

The international scenario has become more adverse since the last meeting. Conflicts in the Middle East have raised oil prices and increased asset volatility. The Central Bank notes that maintaining high interest rates in advanced economies requires extra caution from emerging nations.