Brazil Monetary Policy


Brazil: Central Bank decides to hike interest rate at third meeting in a row

January 22, 2015

At its 4 March meeting, the Central Bank’s Monetary Policy Committee (COPOM, Comite de Politica Monetaria) decided to raise the benchmark SELIC interest rate by a further 50 basis points from 12.25% to 12.75%. The SELIC interest rate is now at its highest level since February 2009. The move was in line with market expectations and represented the third consecutive decision to raise rates.

In the brief accompanying statement, the Bank outlined that the decision to increase the SELIC interest rate was unanimous. In addition, the Bank explained that the hike is consistent with its assessment of the current macroeconomic situation and inflation outlook. Policy makers have been trying to shift Brazil’s economy into a higher gear as Latin America’s largest economy has been plagued by stagnating economic growth and high inflation. In addition, the rapid weakening of the Brazilian real has been contributing to worsening inflation expectations.

LatinFocus Consensus Forecast participants see the SELIC rate ending 2015 at an average of 12.56%. Panelists see the SELIC rate ending 2016 at an average of 11.36%.

Author: Angela Bouzanis, Senior Economist

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Brazil Monetary Policy Chart

Brazil Monetary Policy March 2015

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

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