Banco Central do Brasil committee trims Selic rate by 25 bps to 13¾%

By Tali Rackner

Norfolk, Va., Dec. 1 – Banco Central do Brasil’s Monetary Policy Committee (Copom) voted unanimously to reduce the Selic rate to 13¾% from 14%, according to a news release from the bank.

The committee said indicators released since the last Copom meeting indicate economic activity ran weaker than expected in the short run, which led to downward revisions in forecasts for GDP growth in 2016 and 2017. Economic recovery may be further delayed and be more gradual than previously anticipated, the bank noted.

Inflation expectations collected by the Focus survey for 2017 fell to about 4.9%, and expectations for 2018 and longer remain around 4.5%.

The committee said its inflation forecasts for 2016 in the reference and market scenarios fell since the last report, to around 6.6%. Forecasts for 2017 in the reference and market scenarios show inflation around 4.4% and 4.7%, respectively. Forecasts for 2018 inflation in the reference and market scenarios are around 3.6% and 4.6%, respectively.

Convergence of inflation to the 4.5% target over the relevant horizon for the conduct of monetary policy, which includes 2017 and 2018, fits with a gradual easing of monetary conditions, the bank said.

Copom last lowered the Selic rate to 14% from 14¼% in October.

© 2015 Prospect News.
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