(Bloomberg) -- Brazil's central bank will need to “act fast” to prevent a further deterioration of the country's inflation expectations, its President Roberto Campos Neto said.
“We are seeing many different inflationary shocks building on top of each other. It's very important to act fast to prevent inflation expectations from de-anchoring,” Campos Neto said at an online event Wednesday organized by Credit Suisse Group AG.
Inflation in Latin America's largest economy is approaching 10% as a severe drought pushes electricity bills up, while a faster rollout of its vaccination campaign is pressuring services prices. Central bankers have been raising interest rates since March, with the benchmark Selic now at 5.25% and at least another full percentage point expected to be added by the end of the month.
Campos Neto said core inflation is higher than he would like and political noise around next year's election is also adding to inflation expectations.
“We are fully independent and we will use that independence to achieve our mandate”, he said during the event.
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While policy makers target inflation at 3.5% in 2022, analysts on average currently see the cost of living increases at 4% next year after raising their forecast for the past seven weeks, according to a central bank survey.
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