Brazil Central Bank Cuts Interest Rates by 25 Bp as Expected
The central bank cited higher inflation risks from fuel-price shocks and Middle East conflicts as it delivered a second straight rate cut.
- On Wednesday, Brazil's Central Bank cut the benchmark Selic interest rate by 25 basis points to 14.50%, marking a second consecutive reduction as Copom navigates inflation and geopolitical risks.
- President Luiz Inacio Lula da Silva, seeking a fourth term in October, has consistently criticized high interest rates for stifling growth, pressuring the bank to balance political demands against inflation targets.
- As 12-month price increases accelerated to 4.37%, Copom raised its 2027 inflation forecast to 3.5% and this year's projection to 4.6%, citing 'higher than usual' risks from Middle East conflicts.
- Policymakers wrote that 'future steps of interest-rate calibration' will incorporate new information about Middle East conflicts, noting that monetary policy remains quite restrictive to limit demand recovery.
- Brazil remains relatively insulated from external petroleum price shocks as a net crude exporter according to IEA data, even as the United States Federal Reserve held rates steady amid rising inflation concerns.
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36 Articles
The Central Bank's Monetary Policy Committee (Copom) decided to reduce interest by 0.25 percentage point, 14.75%, to 14.50%, as expected by the market. The BC follows the interest-cutting cycle initiated at the March meeting. But it did not give any indication about the next steps. Exclusive material for subscribers. To have full access, access the link of the subject and register.
Brazil's decision came hours after the Fed kept the rates unchanged, showing growing disagreement over the prospects for monetary policy in the US.
Entities of the productive sector follow in alert on the restrictive level of the basic interest rate of the country, Selic, even after the cut of Wednesday (29). ☆It is still insufficient, commented the CNI (National Confederation of Industry) in note after the BC (Central Bank) announce the reduction of interest by 0.25 point, bringing Selic to the level of 14.5%. According to the entity, the current interest rate aggravates the situation of t…
The decision of the Copom (Monetary Policy Committee) to cut Selic by 0.25 percentage point on Wednesday (29), to 14.5% per year, occurs in the midst of high inflation risks what v o al m of petr leo shock caused by the conflict between the United States and Ir , evaluate experts.
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