Brazil Monetary Policy


Central Bank cuts SELIC rate again defying expectations

At its 10 October meeting, the Central Bank's Monetary Policy Committee (COPOM, Comite de Politica Monetaria) decided to cut the benchmark SELIC interest rate by 25 basis points to a new record-low of 7.25%, in a 5-3 split vote. The decision surprised most market analysts, who had expected the Bank to stay put in October, and represents the tenth consecutive meeting in which policymakers opted to cut interest rates. In an accompanying statement, policymakers concluded that, bearing in mind the balance of risks to inflation, the recovery in economic activity and strong external headwinds, the stability of monetary conditions for a sufficiently long period of time is the most appropriate strategy to ensure the convergence of inflation to the target, although in a non-linear fashion. The communique might be therefore interpreted as a signal that the Central Bank has finally concluded its year-long easing cycle. The minutes, including details of the meeting, will be released on 18 October.


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Brazil Monetary Policy Chart

Brazil Monetary Policy October 2012

Note: SELIC target rate (Taxa SELIC meta) in %.
Source: Central Bank of Brazil (Banco Central do Brasil).

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