Brazil Central Bank Tightens Rules for Meetings With Outside Institutions

(Bloomberg) -- Brazil’s central bank laid out rules for meetings between its board and members of outside institutions to streamline communications as investors worry policymakers will become softer on inflation.

Private gatherings will ideally be held in-person and can’t be recorded, though those with over 15 participants are an exception and will have to be open to the press, according to the central bank statement published on Friday. The same external organization can’t have more than one meeting in a period of 60 days.

The decision was motivated in part by an April investors meeting unexpectedly opened to the press at the last minute at which Governor Roberto Campos Neto changed the bank’s forward guidance, said a person with knowledge of the matter. While the rules in no way limit when board members give policy remarks, they seek to establish greater predictability for gatherings when such statements can occur, the person said, requesting anonymity to discuss the matter. 

Brazil’s central bank is facing intense scrutiny as inflation forecasts continue to rise above target. President Luiz Inacio Lula da Silva has lambasted policymakers for exorbitant borrowing costs, and many investors worry the institution will become more lenient toward consumer prices after the leftist head of state taps a new governor and two directors later this year. At the same time, traders are pricing in rate hikes as soon as September.

The central bank also said board members start meeting weekly — and not monthly — with economists that participate in its analyst survey, Focus. “The objective is to capture the sentiment and projections of economic analysts throughout the quarter in a more timely manner. The change will come into effect this half,” the central bank statement said.

On Wednesday, policymakers kept the Selic unchanged at 10.5% for the second straight meeting. In an accompanying statement, central bankers wrote there are inflation risks in both directions, but noted a persistently weaker real, above-target cost-of-living forecasts and resilient services are creating upward threats to prices.

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