MercoPress. South Atlantic News Agency

Brazil central bank lowers interest rate for second month running

The central bank lowered its interest rate by 50 basis points to 13.25% in early August -- its first rate cut in three years.

Brazil’s central bank this week lowered its interest rate by 50 basis points to 12.75% -- its second consecutive rate cut. Banco Central do Brasil last made a rate hike of 50 basis points in August 2022, carrying the rate to 13.75%, the highest since early 2017, and significantly up from a record low of 2% in March 2021.

“The global environment became more uncertain, with the disinflationary process continuing despite an environment of high core inflation and resilience in the labor market of many countries,” the bank said in its report of the situation

Banco Central Do Brasil last made a rate hike of 50 basis points in August 2022, carrying the rate to 13.75%, the highest since early 2017, and significantly up from a record low of 2% in March 2021.

The central bank lowered its interest rate by 50 basis points to 13.25% in early August -- its first rate cut in three years.

Brazil's annual consumer inflation came in at 4.61% in August, accelerating from the year-on-year gain of 3.99% in July.

Inflation is expected to average 5% in 2023 and 3.5% in 2024, according to the bank's monetary policy committee.

Since Brazil is Latin America's largest economy and a world's leading exporter of commodities, its performance, inflation and currency value vis a vis the US dollar is critical for several neighboring countries such as Mercosur associates, Argentina, Paraguay, Uruguay,.