Brazil’s central bank stresses need for prolonged restrictive rates despite softer inflation

BRASILIA (Reuters) -Brazil’s inflation has shown more downside surprises than analysts had expected, but remains above target and is being driven by strong demand, requiring contractionary monetary policy for a “very long” period, a central bank official said on Thursday.

Economic policy director Diogo Guillen said in a presentation delivered during a closed-door meeting and later published by the central bank that the labor market has provided considerable support to consumption and income, while services inflation remains above the level consistent with meeting the official 3% target.

(Reporting by Marcela Ayres; Editing by Mark Porter)