BRASILIA, Sept 24 (Reuters) – Brazil’s central bank sees a slowdown in economic activity next year as essential for inflation to converge to its 3% target, a senior official said on Thursday.
• “The output-gap opening embedded in our 2027 forecast is essential for prices to converge in our models,” acting Economic Policy Director Paulo Picchetti said during a press conference.
• His remarks came after the bank earlier on Thursday forecast gross domestic product growth of just 1.4% in 2027, well below the 2.3% expansion projected by the government.
• Speaking at the same event, central bank governor Gabriel Galipolo said policymakers are approaching data with “humility” given the unusually high degree of uncertainty surrounding the economic outlook.
• Galipolo said the central bank must avoid relying on a “false sense of precision,” including when assessing whether its forecast of 3.1% annual inflation from the second quarter of 2028 onward constitutes convergence to the 3% target.
• “This is a central bank that does not overreact to data points to avoid creating unnecessary volatility,” Galipolo said.
• Still, he said signs that economic activity is slowing have become increasingly evident.
• Commenting on the central bank’s planned macroprudential measures, Galipolo said policymakers aim to curb aggressive lending practices and tackle cases of predatory credit.
• “Credit card delinquency stands at 65%. A product with a delinquency rate that high has a design flaw,” he said, without elaborating on the new rules.
(Reporting by Marcela Ayres; Editing by Isabel Teles and Gabriel Araujo)
