The economy must decelerate in order to reach the inflation target.

The Director of Economic Policy at the Central Bank, Diogo Guillen, stated on Friday the importance of narrowing the output gap and slowing down the Brazilian economy to achieve the mayor’s inflation target of 3%.

Guillen mentioned at an event organized by Banco de Portugal in Lisbon that the Brazilian monetary authority views the product hiatus positively in the country, but warns it could turn negative in six quarters.

The product’s hiatus refers to the gap between the country’s GDP and its potential GDP, which can lead to inflationary pressures.

The Central Bank currently operates with a 3% inflation target and a tolerance range of 1.5 percentage points above or below that target. Recent IPCA data shows a 4.56% increase in prices over the last 12 months ending in January 2025.

To reach the inflation target, the Central Bank is currently increasing the Selic basic interest rate, which stands at 13.25% annually.

The director mentioned that the Central Bank operates under the assumption that Brazil’s economic growth will decelerate, which is crucial for aligning inflation with the target.

Guillen pointed out the indicators of fragility in the 2024 Brazilian GDP data recently published by IBGE, with household consumption also showing a decrease, indicating a more restrained trend in this aspect.

BC stated that the new Pix regulations are unrelated to the fiscal situation.

The alterations to Pix aim to combat fraud and are not related to an individual’s tax status, according to Breno Santana Lobo, Deputy Chief of the BC Financial Market Competition and Structure Department. The measures are not intended to limit access to payment methods.

Financial institutions will only remove Pix keys if there is proof of fraud, according to the BC leader. Failure to comply with the new regulations will result in penalties, including fines.

“This action is aimed at combating fraud, rather than restricting people’s use of Pix. Therefore, it is unrelated to individuals’ tax circumstances. Whether or not someone pays taxes does not affect their use of Pix,” Lobo explained.

Dead individuals and those who have committed fraud or have registration issues should not be able to use Pix, according to the executive of the BC.

It is a targeted action to address fraud and does not aim to limit people’s use of Pix in any way.