Kapitalo co-founder, Carlos Leonard Walls, is assessing the change in tone of Central Bank President Roberto Campos Neto, who on Tuesday, 14, indicated at a BTG Pactual event that interest rates should not rise as much as market bets, were ” Cold water bath”, where it was pertinent. At the same time, he thought that he could be “shot in the foot”.
Woelz points out that so far, BC has pursued monetary policy to try to contain inflationary expectations by providing short-term responses. “BC has been wrong in the past for being too tiered,” he said at the Eleven event. Wells said the inflation scenario has deteriorated significantly in recent months. “He risks losing control of expectations a little bit and the market is chasing after them.”
The way the central bank is changing its tone shows that the institution “wants to err bearish”, causing interest rates to rise more slowly. The director said that if BC expands the horizon of monetary policy, it will be terrible, because it is not known now nor who will be the next president of Brazil. “The market may interpret this as a way for you to escape the responsibility of fighting inflation next year.”
“It was a big kick in the foot,” Woelz said, noting that BC is showing little desire to raise interest rates faster to where the base rate should be. “It looks like a central bank that if it’s going to make mistakes, it’s going to make mistakes down, but not up.”
The director said he will wait for the next MPC meeting (Copom) to see if there is more information on the new strategy or if it isn’t a communication error by Campos Neto, who breaks with the strategy made so far toward more gradualism. “I haven’t grasped it yet.”
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