The Central Bank released the minutes of its Monetary Policy Council’s recent meeting, maintaining Brazil’s benchmark interest rate at 10.5 percent. However, there were notable differences in this statement compared to previous ones. The committee acknowledged the challenging global environment, particularly uncertainties around the U.S. easing cycle. Despite this, they noted that economic activity and job creation are stronger than anticipated, suggesting that further rate cuts may not be imminent.
The discussion centered on the concept of the output gap, which is now believed to be closer to neutral levels. The committee highlighted the ongoing debate surrounding the neutral interest rate, emphasizing the need for a cautious approach in adjusting this variable given the current uncertainties in the domestic and global economic landscape.