BRASILIA, Aug 22 (Reuters) -
Brazil's central bank had room to start cutting interest rates but its policy should remain contractionary, its monetary policy director said on Tuesday, noting inflation projections must be brought down further to meet the target range of 3% from 2024 onward.
Gabriel Galipolo said policymakers would analyze how inflation projections would behave while maintaining their commitment to achieving the targets.
"That's why the central bank is looking so much at data... It does not give up on pursuing the target," he said at an event hosted by Sao Paulo industry group FIESP.
The central bank's weekly Focus survey of private economists shows median inflation forecasts at 3.86% next year and 3.5% in 2025 and 2026.
The central bank trimmed the Selic benchmark rate by 50 basis points to 13.25% on Aug. 2 as the inflation outlook improved, ending a nearly year-long hold that President Luiz Inacio Lula da Silva had sharply criticized as an impediment to economic growth.
According to Galipolo, who was tapped by Lula to his current role after serving as the No. 2 at the Finance Ministry, the recent weakening of the Brazilian real took place as part of a global movement.
He said the challenging scenario in recent weeks was "95% related" to global markets and stressed that the volatility of the Brazilian currency is greater than that of other emerging countries because it is more liquid.
The real was up 1% late Tuesday morning after losing 5% against the dollar in August until Monday. (Reporting by Marcela Ayres; Editing by David Gregorio)
