Roberto Neto, the head of Brazil's central bank, said policy makers want inflation to fall to 4% next year.
He said at an online press conference on Thursday that the target for the rate was 4%. We know that we have to act if it's 4%. We don't know what the number is. It's part of a plan.
Brazilian policy makers have had to extend their tightening cycle due to persistent price shocks. Since September, inflation has remained above 10% due to higher global commodity costs. The economy is expected to get a boost from rate hikes in the second half of the year, according to central bankers.
Brazil's central bank backs higher key rate to anchor prices.
Consumer prices are expected to rise 8.5% this year and 4.7% next. Last week, Petrobras, the state-controlled oil company, raised gasoline and diesel prices.
The board members are focused on next year's target, but they haven't yet considered the future of their policy horizon.
The central bank hiked rates to 13.25% on June 15 and signaled another increase in August. Economists think borrowing costs will stay in the double digits next year.
Policy makers aim to keep the benchmark Selic at a higher level for longer to ensure that inflation falls back around the target.
The cost of living is one of the main reasons why President Jair Bolsonaro won't be re-elected. He wants to lower taxes on fuel and investigate Petrobras. He is considering giving money to the poor.
Policy makers don't include the impact of fuel tax cuts in their projections until they are in effect.
Petrobras head Resigns as Bolsonaro Rages about Fuel Prices.
The central bank raised its economic growth estimate to 1.7% in 2022, citing a better-than- expected first quarter.
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