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Montevideo, May 19th 2024 - 07:28 UTC

 

 

Brazil's Central Bank lowers Selic rate once again

Thursday, May 9th 2024 - 23:31 UTC
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There was no indication as to what may happen in the next BCB board meeting There was no indication as to what may happen in the next BCB board meeting

Brazil's Central Bank (BCB) lowered once again the South American country's Selic benchmark interest rate to 10.5% per year amid a recent rise in the quotation of the US dollar, Agencia Brasil reported.

By five votes to four, the bank’s policy committee (Copom) reduced the Selic—the country’s benchmark interest rate—by 0.25 percentage points, down to 10.5%, the lowest since February 2022, when it reached 9.75%. It was the seventh time in a row the committee opted for a reduction. However, cuts have come at a slower pace. From August last year to March this year, the financial institution lowered the rate by 0.5 percentage points at each meeting.

The BCB board said in a statement that the international landscape had worsened. In addition, inflation was said to be nearing its cap target given a surge in price volatility. The BCB document also mentions “a credible fiscal policy committed to debt sustainability” that helps “anchor inflation expectations and reduce risk premiums on financial assets, thereby impacting monetary policy.”

Unlike after previous board meetings, there was no indication as to what may happen in the next encounter.

The Selic is the Central Bank’s main tool for curbing Brazil’s official inflation, as gauged by the consumer price index (CPI) which in March stood at 0.16% and is up 3.93% in 12 months.

The 12-month figure is right at the ceiling of the inflation target. For 2024, the National Monetary Council has set an inflation target of three percent, with a tolerance margin of 1.5 percentage points. Hence, the CPI therefore should not exceed 4.5% or sink below 1.5% this year.

(Source: Agencia Brasil)

Categories: Economy, Brazil.

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