Brazil Monetary Policy


Central Bank makes 6th consecutive hike to SELIC rate

At its 27 November meeting, the Central Bank's Monetary Policy Committee (COPOM, Comite de Politica Monetaria) decided to raise the benchmark SELIC interest rate by 50 basis points to 10.00% in a unanimous vote that was in line with market expectations. The decision to push borrowing rates into double-digit territory comes amid continued concerns over inflationary pressures and builds on a series of similar rate hikes in previous months.

In the Bank's brief accompanying statement, policymakers simply stated that the move provides continuation to the adjustment process that began in April of 2013. The phrase that was included in previous statements which indicated that the rate hikes would contribute to bringing down inflation was removed this time around. Analysts interpret this as a possible sign that the Bank is being less hawkish about inflation as economic growth remains sluggish.

The majority of LatinFocus Consensus Forecast participants see the SELIC rate ending this year at 10.00%, with an average forecast of 9.71%. Panelists see the SELIC rate ending 2014 at an average rate of 9.90%.

Author:, Economist

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Brazil Monetary Policy Chart

Brazil Monetary Policy November 2013

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

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