The director of Monetary Policy at the Central Bank (BC), Gabriel Galípolo, said this Tuesday, 26, that the market’s distrust in the execution of the fiscal framework is preventing inflation expectations from converging to the 3% target in the next years.
During his participation in the J. Safra conference, Galípolo pointed out that, compared to the beginning of the year, positive surprises related to the conduct of fiscal policy improved the prospects and dropped economists’ expectations for next year’s primary deficit to 0.8%. as a proportion of Gross Domestic Product (GDP).
He considered, however, that the partial de-anchoring of inflation expectations is more related to the functioning of the framework than to the achievement of its targets.
The director said he had already heard from investors in the market who prefer a scenario with a larger deficit, but with less fiscal impulse.
“There is still a distrust about the execution of the framework, this is present”, declared the director of the BC, who emphasized at the event that expectations are essential in the conduct of monetary policy.
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