(Bloomberg) -- Brazil’s central bank chief justified his decision to change the institution’s written guidance on interest rates during a public speech, one day after another board member said such a move should have been discussed with the whole board and communicated through more formal channels.

Roberto Campos Neto made it clear during a speech in Washington last month that the bank may not make the additional half-point cut it had previously signaled in statements, opening the door for the smaller quarter-point reduction it delivered last week.

“The understanding of a majority of the board was clear: there had been relevant changes and we had to respond with a change of pace,” Campos Neto said at a Wednesday event in Brasilia, citing a worsening inflation scenario and other challenges to its easing cycle.

“Our debate was technical, and all arguments were heard,” he added, still reading from a piece of paper but going off-script from prepared remarks to an economic seminar the bank is hosting.

Campos Neto last week led the majority that decided to cut Brazil’s benchmark interest rate by a quarter-point to 10.5%. All four members of the board appointed by President Luiz Inacio Lula da Silva, however, favored a seventh consecutive half-point cut, as the bank had previously signaled.

The split decision exposed a rift and caused Brazilian assets to tumble as investors assessed the monetary authority’s tolerance for inflation once Lula nominates two new directors and the bank’s governor later this year. 

Paulo Picchetti, one of the board’s four Lula appointees, on Tuesday said the bank should stick to formal communications to markets and investors, and added that Campos Neto’s remarks in Washington had not been fully discussed among board members.

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“This communication from the president happened at an event and I honestly don’t know if he had the objective and intention of making this a guidance, but that ended up being the case,” Picchetti told Bloomberg News in an interview.

The bank’s monetary policy director, Gabriel Galipolo, said at a separate event Wednesday that he wasn’t consulted before Campos Neto’s speech in Washington. Still, he said he has no problems with the comments that the bank chief delivered at that point.

“I want to back up Campos Neto’s speech earlier today,” Galipolo said at the event in New York City. “The central bank has the job and obligation to keep interest rates at a sufficiently restrictive level for the period necessary to make inflation slow to target.”

Committed to Center of Goal 

Campos Neto argued that a stronger labor market implied risks to services costs, while food prices could tick up. On top of that, global financial conditions remain tight, with uncertainties around oil prices. 

There was also a “clear” perception of loss of credibility in the country’s fiscal goals, he said after Lula’s economic team weakened its budget target for next year. 

“That was also amply discussed,” Campos Neto said.

The board, he said, debated the importance of lowering estimates for future consumer price increases, which have been stuck a half-point above the bank’s 3% goal for almost a year and have recently worsened.  

Picchetti on Tuesday vowed that the bank is “100% committed” to bringing inflation to the middle of its target range. But Campos Neto stressed the importance of hitting the goal.

“We discussed the extreme relevance of inflation expectations,” Campos Neto said at the event. “In reality, in a monetary policy debate we shouldn’t even talk about the center of our tolerance range, our goal is 3% and that’s what we need to achieve.”

--With assistance from Fernando Travaglini.

(Updates with comments from Galipolo from ninth paragraph)

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