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