The city on the beach in Brazil

Brazil Monetary Policy October 2019

Brazil: COPOM chops SELIC rate again, taking it to a new historical low

At its 29–30 October meeting, the Central Bank of Brazil’s Monetary Policy Committee (COPOM) unanimously decided to cut the benchmark SELIC interest rate from 5.50% to a new historical low of 5.00%. The move was widely expected by market analysts and marked the Bank’s third consecutive cut as part of its efforts to support the economic recovery.

COPOM’s decision was driven by below-target inflation, dovish monetary policy in advanced economies and weak growth dynamics in Brazil. In the accompanying statement, the Bank reiterated that the current economic environment prescribes accommodative monetary policy and that that it expects inflation to remain moderate, coming in around 3.4% at the end of 2019 and 3.6% at the end of next year, in a scenario based on market expectations.

Looking ahead, COPOM maintained a dovish, albeit somewhat cautious, tone. The Bank stated that a “benign scenario” for inflation should allow for another 50-basis point chop ahead; however, it also stressed that “caution” is warranted and that any move will continue to depend on the evolution of economic activity, the balance of risks and inflation. Moreover, the Bank stated that risks to the price outlook exists on both sides, and that a lag in monetary policy transmission and uncertainty over its effectiveness could stoke inflation ahead.

The next monetary policy meeting is scheduled for 10–11 December.

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest