Brazil's inflation rate unexpectedly slowed in April and kept far below the official target, suggesting a recent period of currency weakness is unlikely to keep the central bank from cutting interest rates next week.
Brazil's monthly inflation rate slowed dramatically to a nine-month low in March, suggesting the central bank may have been too slow to signal another interest rate cut as the data continued to fall short of its inflation target.
Lower power tariffs pulled Brazil's inflation rate below the official target range and even the lowest of forecasts in January. Consumer prices tracked by the benchmark IPCA index rose 2.86% in the twelve months through January, government statistics agency IBGE said on Thursday.
Brazil’s central bank cut its benchmark interest rate on Wednesday to a new low of 6.75%, but hinted it was now done with a historic easing cycle. The bank lowered the Selic rate by 0.25 percentage point, its 11th consecutive cut aimed at helping Latin America’s largest economy emerge from a stifling two-year recession.
Economic activity in Brazil expanded for a third straight month in November, the longest stretch of gains since 2014, suggesting strong momentum at the end of the year. The central bank’s economic activity index rose 0.49% from October after seasonal adjustments
Brazil's road to economic recovery has passed another milestone with official data showing on Tuesday that the country finished 2017 with a record trade surplus 40.5% higher than in the previous year. The US$67 billion surplus was in line with market projections and within the US$65/70bn range forecast by the government.
Brazil's consumer price inflation slowed in April, but not enough to prevent the 12-month rate from remaining well above the central bank's target. The consumer-price index, IPCA, rose 0.71% in April, compared with a rise of 1.32% in March, the Brazilian Institute of Geography and Statistics, or IBGE, said in its latest release.
As was anticipated and in line with the current anti-inflation policy, Brazil's central bank on Wednesday evening announced the increase of the basic Selic interest rate another 50 points to 13.25% from 12.75%. The decision from the nine-member Monetary Committee was unanimous, according to the official release.
Inflation edged up in Brazil in February to hit an annualized rate of 5.68%, following a 0.69% monthly rise in February, national statistical office IBGE said Wednesday.
Brazil’s inflation will slow in the second half of the year as the country produces a bumper crop of grains and the Real doesn’t weaken as it did last year, central bank President Alexandre Tombini said.