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Brazil central bank flags concern over long-term inflation expectations drift

BY Reuters | ECONOMIC | 08:37 AM EDT

BRASILIA, May 19 (Reuters) - Brazil's central bank monetary policy director Nilton David said on Tuesday the bank is troubled by inflation expectations drifting further from its 3% target - particularly for 2028, a horizon expected to be less sensitive to current shocks.

Speaking at an event hosted by Santander, David said the economy is no longer growing above potential, and policymakers will keep monetary policy in restrictive territory until they are confident inflation is converging to the goal. (Reporting by Marcela Ayres; Editing by Gabriel Araujo)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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