Brazil Monetary Policy


Central Bank makes 7th consecutive hike to SELIC rate

At its 15 January 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 10.50% in a unanimous vote. The increase exceeded market expectations of a rise to 10.25%. The decision to push borrowing rates up further came amid ongoing concerns over inflationary pressures and builds on a series of similar rate hikes in previous months.

In the Bank's brief accompanying statement, policymakers stated that the move provides a continuation to the adjustment process that began in April of 2013. The Bank changed its statement after the previous meeting for the first time in months by removing language regarding the impact of rate hikes on inflation. Analysts interpreted this as a sign that the bank was being less hawkish about inflation and that the tightening cycle was coming to an end. However, consumer prices increased 0.92% in December, which marked the biggest jump since April 2003. The rise in prices prompted the Bank to continue the aggressive pace of interest rate hikes.

LatinFocus Consensus Forecast participants see the SELIC rate ending 2014 at an average of 10.51%. Panelists see the SELIC rate ending 2015 at an average of 11.21%.

Author:, Economist

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Brazil Monetary Policy Chart

Brazil Monetary Policy January 2014

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

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