Galípolo: Tariffs’ Economic Ripple Effect Less Than Anticipated, Deflationary Pressures from AI on the Horizon
Central Bank President Gabriel Galípolo stated on Monday, December 1st, that the economic consequences of tariffs imposed by the United States have not materialized as widely predicted. While acknowledging ongoing discussions about potential delayed impacts, he emphasized that the feared scenario has not yet unfolded.
Galípolo noted that the prevailing market view suggests that the tariff increases are more likely to cause a one-time shift in price levels rather than trigger sustained inflationary pressures. This perspective explains the absence of significant inflation de-anchoring in recent periods.
Looking ahead, Galípolo anticipates a decrease in inflation driven by productivity gains from artificial intelligence (AI). This, coupled with a more relaxed labor market, is expected to create a less inflationary economic environment. These insights were shared during a presentation at the XP Political & Macro Forum 2025 in São Paulo.
Market Sentiment vs. Central Banker Caution on AI’s Inflationary Impact
The Central Bank President highlighted that while foreign investors generally express optimism about AI’s deflationary potential, central bankers and the broader market tend to exhibit more caution. This divergence in views underscores the nuanced approach to forecasting future economic trends.
Galípolo also touched upon the ongoing discussion regarding the Selic rate, stating that the Central Bank does not have a clear signal for its next move on basic interest rates. The institution continues to meticulously analyze evolving data to inform its monetary policy decisions.
Labor Market Strength Necessitates a Conservative Central Bank Stance
The current strength of the labor market, according to Galípolo, calls for a conservative approach from the Central Bank. He reiterated that inflation has not yet reached the levels required to meet the Central Bank’s mandate of achieving its inflation target.
The anticipated productivity gains from AI are seen as a key factor in moderating future inflation. This technological advancement is expected to enhance efficiency across various sectors, leading to a more stable price environment.
Galípolo’s remarks suggest a forward-looking perspective, where technological advancements are expected to play a significant role in shaping both inflation and labor market dynamics. The Central Bank remains vigilant, closely monitoring economic indicators to navigate these evolving conditions effectively.
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