Brazil Monetary Policy

Brazil

Brazil: Central Bank leaves SELIC unchanged for third consecutive meeting

November 25, 2015

At its 25 November 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 was in line with market expectations and marked the third meeting at which the Bank has held interest rates after seven consecutive rate hikes. As a result, the SELIC interest rate remains at a nine-year high.

In the brief accompanying statement, the Central Bank outlined that the move is consistent with its assessment of the current macroeconomic situation and inflation outlook. However, unlike the last meeting, the decision to hold the SELIC interest rate stable was not unanimous. Six members of the committee voted to keep the SELIC interest rate unchanged, while two members voted to raise the rate by 50 basis points.

Moreover, the Bank’s decision comes against a worsening inflation outlook in Latin America’s largest economy. Despite the number of rate hikes and the economy being stuck in recession, inflationary pressures remain elevated and inflation rose to an almost 12-year high in October.

Participants in the LatinFocus Consensus Forecast see the SELIC rate ending 2015 at an average of 14.25%. Panelists see the SELIC rate ending 2016 at an average of 12.96%.


Author: Angela Bouzanis, Senior Economist

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Brazil Monetary Policy November 2015

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


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