Brazil Monetary Policy


Brazil: Central Bank halts interest rate hikes, leaves SELIC unchanged

September 2, 2015

At its 2 September 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%, pausing its tightening cycle. The move was in line with market expectations and followed seven consecutive decisions to hike rates. As a result, the SELIC interest rate remains at a nine-year high.

In the brief accompanying statement, the Bank outlined that the decision to hold the SELIC interest rate unchanged was unanimous. In addition, the Bank explained that the move is consistent with its assessment of the current macroeconomic situation, inflation outlook and current balance of risks. The Bank added that keeping the SELIC rate at this historically high level for a long period is needed to bring inflation down to the target range by the end of next year, signaling a likely period of stable interest rates.

The move comes almost one week after recently released data showed that Brazil’s economy contracted in the second quarter. Faltering economic growth and high inflation has plagued Latin America’s largest economy and policy makers have been struggling to shift Brazil’s growth momentum into a higher gear.

LatinFocus Consensus Forecast participants see the SELIC rate ending 2015 at an average of 14.34%. Panelists see the SELIC rate ending 2016 at an average of 12.29%.

Author: Angela Bouzanis, Senior Economist

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Brazil Monetary Policy Chart

Brazil Monetary Policy September 2015

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

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