BRASILIA (Reuters) – Brazil’s central bank highlighted on Tuesday the lack of consensus among policymakers for its decision last week to pause an aggressive monetary policy cycle, noting that a further “residual” interest rate hike was “widely debated.”

In the minutes of its Sept. 20-21 meeting, policymakers reinforced their cautious stance in the fight against inflation, even with more recent data showing an easing of price pressures following cuts by the government to taxes on fuel and energy.

The decision to leave the benchmark Selic interest rate at 13.75% after 12 consecutive hikes came in a vote of 7-to-2, the first split decision since March 2016, with dissenters voting for a final 25-basis-point hike.

“On the one hand, the additional interest rate increase would reinforce the vigilance stance and reflect the observation of a stronger than expected activity,” stressed the minutes.

“On the other hand, caution and the need to evaluate, over time, the cumulative effects to be observed of the intense and timely monetary policy cycle already undertaken would be in favor of the maintenance.”

Most Copom members concluded that rates were already in significantly contractionary territory, with data and inflation expectations supporting the end of the tightening cycle that has lifted the Selic rate from a record-low 2% in March 2021.

But the central bank again emphasized it could resume hiking if disinflation did not turn out as expected.

The hawkish tone was seen as policymakers attempting to undo market bets on monetary easing from as soon as early 2023 as inflation eases in Latin America’s largest economy.

Consumer prices decelerated in the 12 months to mid-September to 7.96%, after running into double digits from September 2021 to July.

The central bank indicated in the minutes that it will be less sensitive to the lower levels it expects to see in the inflation index, said Banco Bradesco in a note to clients.

“We maintain our scenario that the tightening cycle is over and the cuts should only take place from the middle of next year,” wrote Director of Research and Economic Studies Fernando Barbosa.

(Reporting by Marcela Ayres; Editing by Steven Grattan and Catherine Evans)