The central bank last month applied a historic increase of 75 basis points to its main monetary policy instrument, taking it to a level of 7.75%, to try to control inflation.
“The majority considered greater challenges for the conduct of monetary policy given the tightening of global financial conditions, the environment of heightened uncertainty, the inflationary pressures associated with the geopolitical conflict and the resurgence of COVID-19 cases in China, and the possibility of greater effects on inflation”, details the minutes of the meeting published this Thursday.
All members voted to increase the target for the overnight Interbank Interest Rate by 75 basis points to a level of 7.75%.
A member of the Governing Board was of the opinion that the entity’s current challenge demands a communication policy free of ambiguities with precise qualitative and quantitative information on future policy actions.
“Given that the monetary tightening has effects mainly through the channel of expectations, effective communication must be carried out. This opens the discussion to improve the communication strategy towards a more robust scheme,” the minute states.
The document adds that some forward-thinking central banks have future guidance, where in addition to inflation and growth forecasts, they also publish benchmark rate paths that are consistent with the inflation forecast. “This can strengthen the transmission of monetary policy.”
