Gabriel Galipolo, the President of the Central Bank of Brazil, addressed concerns about the bank's potential response to an economic slowdown.
Speaking at an event in São Paulo, he emphasized that the central bank would not take preemptive measures based on events that have not yet occurred. This statement comes in the wake of the bank's decisive action in January, when it increased interest rates by 100 basis points to 13.25% and indicated a similar hike for its next policy meeting in March.
Galipolo explained that the bank's priority is to combat inflation and that it needs to see clear evidence of an economic slowdown rather than reacting to short-term market volatility or speculation. He acknowledged the market's uncertainty regarding how the bank might respond to slowing economic activity, but stressed the importance of basing decisions on actual data.
The central bank chief also noted that asset markets have experienced a rise due to relief that tariffs threatened by former U.S. President Donald Trump were not immediately implemented. He recalled that there were initial fears Trump's policies would lead to inflation and a depreciation of other currencies against the U.S. dollar. However, the Brazilian currency, which had lost over 20% against the dollar in 2024, has seen a recovery of nearly 8% since the beginning of the year.
Galipolo's comments come at a time when policymakers are closely monitoring the economy for signs of a downturn, while also being cautious not to react to mere possibilities. The central bank's approach reflects a commitment to its mandate of maintaining price stability and a careful evaluation of economic indicators before adjusting policy.
