Brazil's financial institutions on Monday reduced the 2018 economic growth forecast to 1.5%, half the initial estimate issued at the beginning of the year, according to the Central Bank weekly survey. The Focus Bulletin, which interviews analysts and economists from Brazil's financial market every Monday, the country's growth estimate was actually reduced from the previous week's 1.53%.
Brazil’s central bank kept interest rates unchanged on Wednesday, as expected, refraining from hiking even after a sharp currency slide as policymakers highlighted the unclear impact of a nationwide protest by truckers in late May.
Brazilian President Michel Temer said on Thursday there was no risk of a currency crisis in Latin America's largest economy despite sharp falls in the exchange rate, while the central bank chief pledged to maintain the bank's intervention in the market.
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 policy makers welcomed an upward revision of the country's growth by the International Monetary Fund, while downplaying the fact its estimate remains lower than others.
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.
The annual inflation rate in Brazil increased to 2.95% in December, from 2.50% in November, rising above economists' projections of 2.80%, but ending the year below the bottom of the central bank's target for 2017, which ranged from 3% to 6%.
Brazil’s central bank cut interest rates to an all-time low on Wednesday and hinted at a smaller reduction early next year, although it said it would be extra cautious going forward. The bank’s nine-member monetary policy committee, known as Copom, cut the benchmark Selic rate by 50 basis points to 7.00%, capping a 725 basis-point decline since October 2016.
Brazil’s central bank has decided to put off any signals about its 2018 interest rate decisions, the bank said on Tuesday, leaving the door open for lower rates next year as the economy recovers with inflation under control.