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☆ Brazil cenbank cuts rates, with more likely to come, but flags 'adverse' backdrop
▼ + stars: | 2023-11-01 | by ( Marcela Ayres | ) www.reuters.com time to read: +3 min

The bank's rate-setting committee, known as Copom, unanimously reduced its Selic benchmark interest rate to 12.25%, a move expected by all 40 economists polled by Reuters. However, despite its expectation of keeping its pace of rate cuts, the bank mentioned an "adverse" global outlook that "requires caution on the conduct of monetary policy." The prospect of higher long-term U.S. interest rates has led to a tightening of global liquidity and strengthening of the dollar, adding to inflation pressures in emerging markets like Brazil. In its statement, the central bank also highlighted the persistence of elevated core inflation in several countries, alongside emerging geopolitical tensions following the outbreak of the Israel-Palestine conflict. The inflation target for the upcoming year and beyond stands at 3%, with the same tolerance interval.

Persons: Daniel Cunha, Luiz Inacio Lula da, Lula, Marcela Ayres, Diane Craft Organizations: Reuters, Thomson Locations: BRASILIA, Brazil, Israel, Palestine

☆ Brazil central bank kicks off rate cuts more aggressively than expected
▼ + stars: | 2023-08-02 | by ( Peter Frontini | ) www.reuters.com time to read: +3 min

The bank's rate-setting committee Copom cut its Selic policy rate to 13.25%, as just 10 of 46 economists surveyed by Reuters had anticipated. Although Wednesday's policy decision was closely divided, Copom's policy statement signaled a shared outlook to keep up the pace of rate cuts in coming months. Wednesday's rate decision reflected a split among board members, with five votes in favor of the 50-basis-point cut and four votes for a more modest 25-basis-point cut. Finance Minister Fernando Haddad had called for a rate cut of 50 basis points earlier on Wednesday. Brazil's inflation target is 3% for both years.

Persons: we'd, William Jackson, Luiz Inacio Lula da Silva's, Roberto Campos Neto, Lula, Campos Neto, Fernando Haddad, Haddad, Copom, Peter Frontini, Marcela Ayres, Brad Haynes, Diane Craft Organizations: SAO PAULO, Reuters, Capital Economic, Finance, Fitch, Carolina, Thomson Locations: Brazil

☆ Brazil central bank signals possibility of rate cut in August by majority view
▼ + stars: | 2023-06-27 | by ( ) www.reuters.com time to read: +3 min

BRASILIA, June 27 (Reuters) - Brazil's central bank signaled on Tuesday that a majority of its policymakers see a possibility of initiating a "parsimonious" rate cut at its next meeting in August, provided that a more benign inflation scenario is consolidated, while a minority adopts a more cautious stance. Although it adopted a more moderate tone by excluding the possibility of rate hikes from its policy statement, the central bank refrained from signaling monetary easing at its next meeting in August last week, pointing instead to a data-dependent stance. The communication drew criticism from President Luiz Inacio Lula da Silva, ministers, and some market participants, who expected a notable shift in the bank's tone due to lower-than-expected inflation, a stronger currency, and easing inflation expectations. The central bank stressed in the minutes that inflation expectations declined slightly, but remain deanchored from official targets, partially due to the questioning about a possible change in future inflation targets, adding that "decisions that reanchor expectations can lead to faster disinflation." The National Monetary Council, consisting of the Finance Minister, Planning Minister, and central bank governor, will convene on Thursday to confirm the 3% inflation targets for 2024 and 2025, and set the official target for 2026.

Persons: Copom, Luiz Inacio Lula da Silva, Fernando Haddad, Marcela Ayres, Steven Grattan Organizations: Monetary, Finance, Planning, Thomson Locations: BRASILIA

☆ Brazil central bank holds rates, points to worse inflation expectations
▼ + stars: | 2023-03-22 | by ( ) www.reuters.com time to read: 1 min

BRASILIA, March 22 (Reuters) - Brazil's central bank on Wednesday held interest rates steady for the fifth consecutive time, pointing to worse inflation expectations, and acknowledged a more challenging scenario amid fears of a global banking crisis. The bank's rate-setting committee, known as Copom, kept its Selic benchmark interest rate at 13.75%. The decision, which defied intense pressure from the new government of President Luiz Inacio Lula da Silva to reduce borrowing costs, matched the expectations of all 30 respondents in a Reuters poll. Reporting by Marcela Ayres Editing by Chris ReeseOur Standards: The Thomson Reuters Trust Principles.

☆ Brazil central bank holds rates, flags increased inflation expectations
▼ + stars: | 2023-03-22 | by ( Marcela Ayres | ) www.reuters.com time to read: +3 min

The bank's rate-setting committee, known as Copom, maintained its Selic benchmark interest rate at 13.75%. "The Committee emphasizes that it will persist until the disinflationary process consolidates and inflation expectations anchor around its targets, which have shown additional deterioration, especially at longer horizons," they added. The central bank acknowledged the worsening global environment amid banking turmoil, but emphasized recent data on global activity and inflation have remained resilient. Meanwhile, the central bank's inflation expectations have risen to 5.8% for 2023 and 3.6% for 2024. Lula has repeatedly called for lower borrowing costs, describing the current Selic rate "irresponsible" on Tuesday.

☆ Lula says 'no explanation' for Brazil's current interest rate levels
▼ + stars: | 2023-02-06 | by ( ) www.reuters.com time to read: +1 min

RIO DE JANEIRO, Feb 6 (Reuters) - Brazilian President Luiz Inacio Lula da Silva said on Monday there was "no explanation" for the country's high interest rates, with the benchmark rate at a six-year high, adding that development bank BNDES could help bring down lending costs. Lula, who last week criticised the central bank's formal autonomy and suggested a review of its status, said Brazil's problem was a "culture of high rates" rather than the newfound independence of the central bank. Lula called on business leaders to speak out against current interest rate levels, while dubbing the monetary policy committee's explanation for keeping rates at the current 13.75%, in place since August, "shameful". "There is no justification for the interest rate levels. The committee, known as Copom, said last week it was considering holding interest rates high for longer than markets expect due to fiscal risks under Lula.

☆ Brazil central bank holds interest rates, eyes moderating growth
▼ + stars: | 2022-10-26 | by ( Marcela Ayres | ) www.reuters.com time to read: +3 min

BRASILIA, Oct 26 (Reuters) - Brazil's central bank on Wednesday held interest rates at a nearly six-year high for the second policy meeting in a row, noting that economic growth seems to be slowing but inflation remains high. In their statement of Wednesday's rate decision, Copom said indicators since their September meeting suggested "more moderate" economic growth in Brazil, but consumer inflation remains "high." In one of the few changes to the statement, the central bank indicated that 2023 and 2024 are now equally weighted on its policy horizon. Policymakers held their inflation outlook for this year unchanged at 5.8%, but raised their forecast for next year to 4.8%, from 4.6% last month, compared to a 3.25% target. After a law established the formal autonomy of the central bank last year, central bank chief Roberto Campos Neto is set to serve out his term through 2024, regardless of the election's result.

☆ Brazil central bank holds interest rates after 12 straight increases
▼ + stars: | 2022-09-21 | by ( Marcela Ayres | Fergal Smith | ) www.reuters.com time to read: +2 min

BRASILIA, Sept 21 (Reuters) - Brazil's central bank on Wednesday decided to keep interest rates unchanged, pausing an aggressive monetary tightening cycle even as policymakers in the United States and other major economies are still racing to catch up with inflation. The bank's rate-setting committee, known as Copom, decided by a vote of 7-to-2 to leave its benchmark Selic interest at 13.75% after 12 consecutive increases. read moreBrazil's central bank decided to stop hiking rates after consumer prices registered their second straight monthly drop in August, helped by tax cuts on fuel and energy. read moreEconomists are already debating when Brazil's interest rates might start falling again – including Economy Minister Paulo Guedes himself, who predicted rate cuts in early 2023. However, central bank directors have taken a harsher tone in recent public comments, stressing it is too early to start discussing lower rates as the battle with inflation is not done.

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