Inflation jitters keep BCB vigilant

FXStreet (Edinburgh) - Minutes from the Brazilian central bank have stated that higher interest rates are necessary in order to bring consumer prices back to the bank’s target. The BCB also reiterated that inflation will remain high throughout 2015 while it is expected to reach 4.5% by end of 2016 (from current forecasts at 9.3% for the present year).

The BCB emphasized its strategy of higher rates and stressed that it will remain vigilant on inflation expectations, arguing that conditions for lower prices during the next year have somewhat improved.

The central bank also sees changes in fiscal policy are affecting inflation expectations and could be negative for economic sentiment.