BRASILIA, May 16 (Reuters) - Brazil's central bank Monetary
Policy Director Bruno Serra indicated on Monday that
policymakers have not ruled out further interest rate hikes
beyond June, saying "time will tell".
The remarks come amid market discussions on the need for an
even stricter monetary tightening cycle at a moment when
inflation expectations keep drifting further above official
Earlier in May, the central bank raised interest rates by
100 basis points to 12.75%, from a 2% record low in March last
year, signaling a smaller adjustment for next month.
"We put ourselves in a situation of signaling another hike
as probable. From now on, time will tell," said Serra while
participating in a conference hosted by Goldman Sachs.
He acknowledged preferring lower interest rate fluctuations
but recognized that this is not always possible.
"Preferring the scenario of interest rate stability for a
longer period is one thing, but we are not tied to a specific
scenario. We are tied to chasing the center of the (inflation)
target in the relevant horizon as we have done in recent years."
Serra said that maintaining high interest rates for a longer
period to tame inflation is preferable, when possible, to
raising rates and then quickly lowering them.
After a recent depreciation of the Brazilian real, he said
the currency was affected mainly by the weakening of the yuan,
but also by the U.S. monetary tightening. Despite this, he added
that the trend for the exchange rate is to perform "much better"
than in 2020 and 2021.
(Reporting by Marcela Ayres; Editing by Lisa Shumaker)