MercoPress. South Atlantic News Agency

Brazil leaves basic interest rate unchanged at 11%, given 'inflation prospects'

“Assessing the evolution of macroeconomic scenario and the inflation prospects”, Copom unanimously decided to maintain the Selic rate at 11%

With Brazil battling recession and inflation a month away from the presidential election, the Central bank kept its key interest rate on hold at 11%. Traders and analysts had forecast no change and the central bank's monetary policy commission (Copom) duly decided to leave all quiet following its monthly two-day meeting.

“Taking into account the macroeconomic climate and inflation outlook, Copom decided unanimously to maintain the Selic rate at 11%,” the bank said in a statement.

The brief statement said “Assessing the evolution of macroeconomic scenario and the inflation prospects, the Copom unanimously decided to maintain the Selic rate at 11.00 percent, without bias.

”The following members of the Committee voted for this decision: Alexandre Antonio Tombini (Governor), Aldo Luiz Mendes, Altamir Lopes, Anthero de Moraes Meirelles, Carlos Hamilton Vasconcelos Araújo, Luiz Awazu Pereira da Silva, Luiz Edson Feltrim and Sidnei Corrêa Marques.

“The September Copom Minutes will be released in Portuguese next Thursday, September 11”

After Latin America's largest economy slid into recession last week, analysts had cited the need to rein in inflation which in July crept above an official 6.5% ceiling, seeing little scope for a cut.

Brazil is in a fourth year of anemic growth and the 2014 forecast is for just a 0.52% rise in GDP.

The benchmark rate has not budged since a quarter point rise in April in what was the ninth straight monthly increase as Brazil fought against inflationary pressures.

This week's decision came with a new Ibope opinion poll showing environmentalist Marina Silva as still on course to oust incumbent Dilma Rousseff in an October 26 run off.

The poll showed Workers Party (PT) candidate Rousseff with 37% of voter intentions for the first round on October 5 with Socialist Party (PSB) candidate Silva on 33%.

But the poll also indicated Silva would win on the second ballot by 46% to 39% for Rousseff. Polls last week had put Silva's lead at ten points.

The Bank in 2011, when Rousseff took office, set in train a cycle of monetary expansion which took interest rates down to an historic low of 7.25% within a year before inflationary pressures forced a turnaround now threatening the president's re-election bid.