Galípolo says there is no single "trigger" for interest rate hikes and avoids giving a timeframe for any eventual change.

BRASILIA (Reuters) - The president of the Central Bank, Gabriel Galípolo, said this Thursday that the institution does not have an answer regarding the timeframe for which the Selic rate will be maintained at 15% per year, stressing that this decision will depend on the analysis of data.

After the Monetary Policy Committee (Copom) stated last week that inflation demands a contractionary monetary policy for a "quite prolonged" period and that it will not hesitate to resume the cycle of raising basic interest rates if necessary, Galípolo stated in a press conference that any decision in this regard would not depend on a specific factor.

"We're not going to say how long 'quite prolonged' is. We're saying that we're not giving that kind of guidance or commitment. We'll continue analyzing the data," he said.

Asked about the outlook for a possible interest rate hike, Galípolo said there wouldn't be a single "trigger." "As we've been saying, there isn't one specific indicator; the Central Bank will analyze a set of indicators."

Last week, the Central Bank decided to raise the Selic rate by another 0,25 percentage points, to 15,00% per year, and highlighted that it anticipates an interruption in the interest rate hike cycle, considering that the rate should remain unchanged for a "quite prolonged period".

According to Galípolo, there are several paths to reaching the center of the inflation target, adding that the authorities are committed to pursuing the target within the relevant monetary policy horizon, which is currently the last quarter of 2026.

The president of the Central Bank stated that there is a lag in the effect of monetary policy, and that the interest rate the economy is experiencing is not the current level of the Selic rate, which justifies the pause in the rate hike cycle.

The Central Bank has an official inflation target of 3%, with an allowed band of 1,5 percentage points above or below.

Regarding fiscal policy, Galípolo stated that it is part of democracy that debates on the subject proceed with advances and setbacks, emphasizing that the issue of the Tax on Financial Operations (IOF) does not directly affect the conduct of monetary policy.

On Wednesday, the National Congress dealt a blow to the government by overturning decrees that dealt with raising IOF tax rates.

According to Galípolo, the Central Bank will examine how the issue of public accounts is reflected in current inflation and market expectations for prices.

He added that there is no "mechanical" relationship between the balance of risks for inflation disclosed by the central bank in its communications and the conduct of monetary policy.

According to Galípolo, the Central Bank's decision not to specify whether its balance of upside and downside risks to inflation is symmetrical or asymmetrical was intentional and aimed to avoid a "counting of risks" in one direction or the other as an indication of what the Central Bank will do.

(By Bernardo Caram; Additional reporting by Fernando Cardoso)