Brazil cuts Selic rate by 100 bps to 11¼% in monetary easing step-up

By Susanna Moon

Chicago, April 13 – Banco Central do Brasil’s Monetary Policy Committee (Copom) decided to lower the Selic rate by 100 basis points to 11¼% in a unanimous decision on Wednesday.

The bank chose to somewhat intensify the pace of monetary easing amid perceived risks as well as encouraging inflation forecasts, according to a bank statement

“Inflation developments remain favorable,” with expectations at about 4.1% for 2017, at 4.5% for 2018 and down a bit from that for 2019 and beyond, the bank said.

“The disinflation process is more widespread.”

Meanwhile, economic indicators remain “consistent with stabilization of the economy in the short run” and a gradual recovery during the rest of the year, the bank said.

Globally, the outlook is uncertain, with sustainability of growth and stability of commodity pricing in doubt, the bank added.

“The pace of monetary easing will depend on the estimated extension of the cycle and on the degree of frontloading,” the bank noted.

As reported Feb. 23, the bank voted unanimously to reduce the Selic rate to 12¼% from 13%.

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