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Montevideo, August 12th 2020 - 21:28 UTC

 

 

Brazil slashes benchmark interest rate 75 basis points to a record low of 2,25%

Thursday, June 18th 2020 - 12:32 UTC
Full article 23 comments
Brazilian interest rate futures market pricing on Wednesday indicated that another cut in the Selic rate to 2.00% by the end of the year was more likely than not Brazilian interest rate futures market pricing on Wednesday indicated that another cut in the Selic rate to 2.00% by the end of the year was more likely than not

Brazil’s central bank cut its benchmark interest rate by 75 basis points to a record low of 2.25% on Wednesday, as expected, and said there was some room left for further monetary stimulus to support an economy ravaged by the coronavirus pandemic.

With inflation running significantly below target this year and set to undershoot again next year, policymakers indicated the potential for further “residual” easing in coming months.

Brazilian interest rate futures market pricing on Wednesday indicated that another cut in the Selic rate to 2.00% by the end of the year was more likely than not.

Wednesday’s move was the second straight 75 basis point cut, and policymakers rowed back on their steer last month that 2.25% would be a floor. Forecasts indicate the Brazilian economy is heading for its steepest annual drop on record.

The bank’s rate-setting committee, known as Copom, said its decision was unanimous. “The Copom believes that the current state of affairs continues to recommend an unusually strong monetary stimulus, but it recognizes that the remaining space for monetary policy stimulus is uncertain and should be small,” policymakers wrote in their decision.

“For the next meetings ... any possible adjustment to the current monetary stimulus would be residual.”

Copom noted that various measures of underlying inflation are running below central bank targets, which are 4% this year and 3.75% next year.

Using forecasts based on a range of exchange rates and interest rate paths, Copom said inflation is pegged at 1.9% or 2.0% this year, and 3.2% or 3.0% next year.

Economic slack resulting from the COVID-19 crisis could sap demand and depress inflation even further, but loose fiscal policy, market worries over economic reforms and the effects of recent stimulus could all push inflation up, Copom said.

Most economists expect Latin America’s largest economy will suffer its worst annual downturn this year since records began in 1900. The central bank’s weekly survey of economists put the contraction at more than 6%.

Several global investment banks predict Brazil’s gross domestic product will shrink this year more than 7%. Last week, the World Bank revised its Brazil GDP forecast to an 8% drop.

 

Categories: Economy, Brazil.

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  • Chicureo

    Terence Hill's favorite hamburger!

    https://noblepig.com/2014/09/bacon-avocado-cheeseburger/

    Avocados will improve your outlook on the world and make you feel almost a part of the human race again.

    Jun 19th, 2020 - 04:30 pm 0
  • Terence Hill

    Chicureo the Advocator of the Avocado, Psychological Transferee, Narcissist, Criminal Libeller, & the Spam King
    Someone who is that immoral that they have defended Pinochet, tells you every thing about their lack veracity you need to know.

    Jun 20th, 2020 - 02:10 pm 0
  • Jack Bauer

    Chicureo

    Gollum's comment “Someone who is that immoral that they have defended Pinochet” sounds like the pot calling the kettle black......Terry Hill praises, and worships Lula, the biggest crook Brazil has ever known......but that is not immoral, it's just plain stupid.

    Chicureo, I doubt Terry even knows what an avocado, far less a hamburger, is ...his closest interaction with the fruit (or vegetable, as some classify it) are the pits Ma Gollum throws down the chute with the rest of the trash.

    Just as well you said “make you feel almost a part of the human race”.....'almost' is the closest it'll ever get to humans..

    Jun 20th, 2020 - 06:21 pm 0
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