The Brazilian central bank indicated it will keep interest rates at their current level for an extended period given favourable signs for the inflation outlook.
Brazil Central Bank President Alexandre Tombini Tuesday said there are consistent signs that the recovery of economic growth is underway and insisted despite some market skepticism, that inflation is under control.
Stimulus measures enacted by policymakers in recent months should soon lead to a pickup in growth, breathing some life into Brazil after three straight quarters of stagnation, said central bank president Alexandre Tombini. However he warned about two years of slow global growth and markets volatility.
Brazil’s inflation rate fell more than economists expected in May, pushing the annual pace below 5% for the first time since September 2010. Monthly inflation slowed to 0.36% from 0.64% in April.
Having a floor of 1.80 Real to the US dollar is no great thing, but it is a target to sustain said Brazil Development, Industry and Foreign Trade minister Fernando Pimentel referring to the latest announcements to promote Brazilian industry battered by a strong currency and massive inflow of ‘cheap’ imports.
The Brazilian economy last year registered its second-worst performance since 2003 as higher borrowing costs and a currency that rallied to a 12-year high led it to under-perform emerging-market peers China and India.
Brazil’s central bank indicated on Wednesday it will keep cutting interest rates at the current pace after it reduced borrowing costs by a half-point to 10.5%, for a fourth straight meeting.
Brazilian consumer prices rose faster than expected in November. Inflation as measured by the benchmark IPCA index, quickened to 0.52% last month from 0.43% in October.
Economic activity in Brazil expanded 0.17% in May over the previous month, the slowest pace this year, according to the Central Bank’s seasonally adjusted index. As direct reference growth in April was 0.44%. However the May figure is 4.25% over a year ago.
Brazil's central bank increased late Wednesday its benchmark interest rate for the fourth straight meeting after consumer prices exceeded the upper limit of its target range for the first time since 2005.