Seven months into the presidency of Roberto Campos Neto, Brazil's central b...
BRASILIA - Seven months into the presidency of Roberto Campos Neto, Brazil’s central bank has implemented a quiet revolution in its monetary policy, with the former trader showing a willingness to tolerate a weaker currency.
The big difference now, according to observers, is that the bank’s policy-making committee known as ‘Copom’ under Campos Neto’s guidance is far less concerned with the spillover effect on the exchange rate. The central bank’s actions and statements since it cut the Selic rate by half a percentage point to a then low of 6.00% on July 31, and markets’ reaction to them, are instructive.
Not everyone agrees that there is a major policy shift under way. But a consensus is forming that a mix of low growth and inflation calls for more rate cuts, while dollar outflows from Brazilian companies paying down foreign debt and large FX reserves open up the potential for FX intervention.“He was a trader, a treasurer, and a banker, so maybe that makes him more at ease pursuing these kind of interventions.
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