WASHINGTON (Reuters) – The recent weakening of Brazil’s real against the dollar has not spurred inflation, Brazilian central bank governor Roberto Campos Neto said on Friday, adding that there was room for a cut in the country’s benchmark Selic interest rate.

At a news conference in Washington, where he attended events at the International Monetary Fund (IMF) annual meetings, Campos Neto noted Brazil has a floating exchange rate and that the bank only intervenes in currency markets when there is a liquidity gap in the market.

Brazil’s central bank cut its benchmark interest rate to a new record low of 5.50% last month and suggested more rate cuts are in the pipeline, highlighting an increasingly uncertain global outlook and tame domestic inflation.

While Brazil’s real is trading at around 4 per greenback BRBY, weak economic growth, high unemployment and substantial slack in the economy suggest inflation will remain below target this year and next, analysts say, requiring more easing.

Former trader Campos Neto also said on Friday that Brazil’s growing credibility has helped limit the pass-through from the real’s depreciation, adding that Brazil’s risk premium had fallen despite the weakened exchange rate.

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