September 14, 2017 / 11:10 AM / 10 months ago

Brazil's Goldfajn sees smaller October rate cut, Valor says

SAO PAULO, Sept 14 (Reuters) - Brazil's central bank favors a gradual ending of the ongoing interest-rate cutting cycle as long as economic conditions do not change suddenly, Governor Ilan Goldfajn told Valor Econômico newspaper in an interview published on Thursday.

Goldfajn told Valor that monetary policy minutes released this week showed the benchmark Selic overnight lending rate is set for "a moderate reduction", without specifying what the size of that cut will be. The Selic is now at 8.25 percent.

He told Valor that investors are increasingly conscious that the central bank's interest-rate strategy is data-dependent, reducing market noise created by "any statement".

He also said this year's decline in inflation strongly reflects falling food prices and better anchored price expectations for the future, Valor said.

"There's a risk that inflationary inertia will keep inflation low, a risk that we should learn to live with," Goldfajn said.

His remarks underscore confidence among government policymakers that rates in Brazil will stay low for a prolonged period and help revive an economy that is slowly emerging from almost three years of recession. Brazilians pay the highest borrowing costs among the world's largest economies.

The bank cut the Selic last week by a full percentage point. Policymakers have trimmed the benchmark rate from 14.25 percent since late last year.

The central bank's press office was not immediately available to confirm Goldfajn's comments to Valor. (Reporting by Guillermo Parra-Bernal; Editing by Catherine Evans)

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