The Central Bank of Brazil unanimously cut its key Selic rate by 100 basis points to 10.25 percent on Wednesday May 31st of 2017, as widely anticipated. It is the sixth straight rate decline, bringing borrowing costs to the lowest since December of 2013 amid slowing inflation and a gradual recovery.
Brazil's Central Bank cut the key interest rate by a full one percentage point on Wednesday in an effort to inject life into the floundering economy. This was the fifth straight cut, taking the key Selic rate to 11.25%.
Brazil's annual inflation eased to the lowest rate since 2010 and came very close to the government's long-missed target, leaving the door open for the central bank to accelerate the pace of interest rate cuts next week.
Bigger interest rate cuts are an option for Brazil's central bank, Governor Ilan Goldfajn anticipated, signaling an emphasis on supporting the economy as inflation falls faster than expected. The central bank has lowered its benchmark rate in each of monetary policymakers' four meetings since last October, when it made the first cut in four years. The bank reduced the rate by 25 basis points in each of the first two cuts, followed by two drops of 75 basis points apiece. The rate now stands at 12.25%.
Brazil cut its key interest rate further on Wednesday to try to prop Latin America's biggest economy out of its worst recession in a century. The country's central bank cut the benchmark rate by 0.75 percentage points to 12.25%, still one of the worlds highest.
The Brazilian real gained on Tuesday to its strongest level in more than a year and a half, following a rise in capital inflows and after the central bank resumed currency intervention following a two-week pause. The real firmed 0.45% to 3.096 real per dollar, its strongest showing since July 2015.
Brazil's central government registered a primary budget deficit of 154.255 billion reais (US$49.40 billion) in 2016, meeting its target but recording a third consecutive annual deficit that reflects the dire state of the country's finances. In December, the country posted a primary deficit of 60.124 billion reais (US$19.25 billion).
Brazil's Finance Minister Henrique Meirelles has admitted that the government is going to revise its official forecast for this year's GDP growth, but gave no details as to the extent of the change. In its latest forecast, the government had estimated the economy was going to grow 1% in 2017.
Brazil's inflation finished 2016 within the official target range, government data showed on Wednesday. Consumer prices rose 6.29% last year slowing from an increase of 10.67% in 2015 and below the 6.5% ceiling of the official goal.
Brazil's central bank cut its key interest rate Wednesday for the second month running, as data showed that the recession hitting Latin America's largest economy continued into the third quarter. The central bank lowered the benchmark Selic rate by a quarter of a percentage point, to 13.75% -- still one of the world's highest.