Brazil Monetary Policy June 2016


Central Bank leaves SELIC rate unchanged again

At its 8 June meeting, the Central Bank’s Monetary Policy Committee (COPOM, Comite de Politica Monetaria) decided to leave the benchmark SELIC interest rate unchanged at 14.25%. The move marked the seventh meeting at which the Bank has held interest rates after seven consecutive rate hikes. The result was in line with market analysts’ expectations. The SELIC interest rate remains at a near-decade high amid high inflationary pressures and an economic recession in the country.

In its brief accompanying statement, the Central Bank outlined that, despite progress in easing price pressures, high inflation along with elevated inflation expectations allow no room to ease monetary policy. Similar to the last meeting, the decision to hold the SELIC interest rate stable was unanimous. This meeting marked the final monetary policy meeting under Central Bank President Alexandre Antônio Tombini. Tombini will be replaced by Ilan Goldfajn, the former chief economist at Itaú Unibanco Holding, who will chair his first monetary policy meeting in July.

Participants in the LatinFocus Consensus Forecast see the SELIC rate ending 2016 at an average of 13.28%. Panelists see the SELIC rate ending 2017 at an average of 11.46%.

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Brazil Monetary Policy Chart

Brazil Monetary Policy June 2016

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

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