• Categories
  • Archives

Brazil Leaves Basic Rate at 10.75%, Hinting It Will Go Up in January

Alexandre Tombini Brazil kept it benchmark overnight banking rate unchanged after curbs on credit allowed central bank President Henrique Meirelles to leave anticipated rate increases for his successor. 
Policy makers including Alexandre Tombini, who is slated to succeed Meirelles next month, voted unanimously to keep the Selic rate unchanged at 10.75%.

The eight-member board, in a statement, said they faced a “less favorable scenario” than in their last meeting, though they needed “more time” to gauge the economic impact of new reserve requirements on banks to curb the growth of credit.

Traders are betting the Brazilian central bank will raise borrowing costs by a half-point at its next meeting in January. About 100 economists in a central bank survey published December 3 said they expect a half-point increase in January. The next Monetary Committee, Copom, is scheduled for January 18/19.

The Central bank release said that taking into account the current macro-economic situation and inflation prospects, Copom unanimously decided to keep the Selic rate at 10.75%. Given a less favorable scenario than that of the last meeting but taking into account that because of credit and liquidity conditions – the Central bank recently introduced ‘macro-prudential’ measures – the prevailing feeling among members of the Committee was that additional time was needed to better gauge the effects of those initiatives on the monetary conditions.

To that respect, the Committee agreed it was not the right time to re-evaluate in this meeting the monetary policy strategy and will follow closely the evolution of the macroeconomic scenario in the next meeting and then define the following steps regarding its monetary policy strategy.

The world’s eighth-largest economy will grow 7.54% this year, its fastest pace in more than two decades, according to the most recent central bank survey. GDP likely expanded 0.4% in the third quarter from the previous three months.

Retail sales grew 11.8% in the year through September, the fastest pace since March. Unemployment fell to a record low 6.1% in October. Domestic demand, buoyed by consumer lending growing at a 20% annual pace, is fueling an acceleration of inflation.

Consumer prices in Brazil, as measured by the benchmark IPCA index, rose 5.63% percent in November from a year earlier and 0.83% from October, the biggest monthly increase since April 2005.

Inflation expectations for 2011 have accelerated to 5.2%, from 4.8% in August and 4.5% in March, according to the central bank survey.

Tombini, who has been on the bank’s board since 2005, won Senate committee approval on December 7 to be the bank’s next president. At his confirmation hearing he echoed remarks made by Meirelles that higher reserve levels would have an impact on the economy, even though they aren’t a substitute for traditional monetary policy tools.

President-elect Dilma Rousseff has pledged to contain spending next year in a bid to reduce Brazil’s real interest rate, the highest in the Group of 20 nations.

Higher borrowing costs are also putting pressure on the real, as investors buy higher-yielding currencies with funds borrowed at lower rates. The teal, which is the best performer among 16 major currencies tracked by Bloomberg over the past month, weakened 0.5% to 1.6903 per U.S. dollar Tuesday.

Mercopress

Tags:

  • Show Comments (4)

  • João da Silva

    DU 48
    [quote]Also going up… like lightning..
    written by DU 48, December 15, 2010
    61.83% pay rise for senators and federal deputies! FFS!
    sos Brazil!
    [/quote]

    Do you have to spoil my weekend by writing such things?:sad:

    Tit for tat: Your beloved lady [i][b]Ex-Senator[/b][/i] who was thrashed at the polls is going to be the Minister of Fish, Sharks, Whales and other similar species that inhabit the South Atlantic Ocean off the coast of our country. ;-):D

  • DU 48

    Also going up… like lightning..
    61.83% pay rise for senators and federal deputies! FFS!
    sos Brazil!

    http://www.estadao.com.br/noticias/nacional,parlamentares–presidente–vice-e-ministros-ganharao-r-26-7-mil-mensais,654071,0.htm

  • Rafael

    Had they said it, it would be a lie, for the interest rates have only gained their stratospheric height after the mid 1990s.

  • hubbel

    [quote]in a bid to reduce Brazil’s real interest rate, the highest in the [b]Group of 20 nations[/b].[/quote]

    LOL….you could’ve just said “highest on the planet and has been for the last century!”

Your email address will not be published. Required fields are marked *

comment *

  • name *

  • email *

  • website *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Ads

You May Also Like

Elisete

Elisete, the Brazilian Singing Bird from Israel

Her name is Elisete, she is a singer and songwriter. She was born in ...

Geraldo Alckmin, presidential candidate in Brazil

Brazil’s Election – Alckmin Hands Lula Victory on a Plate

Brazilian President Luiz Inácio Lula da Silva has such a commanding lead in opinion ...

It Was the World’s Second Biggest Bank Heist Ever. But in Brazil Nobody Saw a Thing.

The story of Brazil’s biggest bank heist ever starts like this: Three months ago ...

Fausto Wolff brings out A Mão Esquerda

With an original plot and dynamic reference to the current social, economic and political ...

Bookie Got Sweet Deal from Brazil Government

The corruption scandals engulfing Brazil’s ruling Workers Party, PT, was further stoked Wednesday by ...

Banana plantation

Brazil’s Conference Wants World to End Poverty Selling Farm Goods

Figures disclosed by the Common Fund for Commodities (CFC) show that over 70% of ...

Brazil Ends Tariff on Imported Ethanol Drawing Applause from Sugarcane Industry

Reacting to the Brazilian government’s announcement that it has unilaterally eliminated its tariff on ...

Graffiti in Brazil against American President Bush

Brazil’s Monuments Tagged with ‘Out, Murderer Bush’

Two monuments of the Brazilian capital BrasÀ­lia, the JK Memorial JK and the Museum ...

Brazil’s Gol to Offer 10 New Daily Flights Between Rio and Sí£o Paulo

Gol Linhas Aereas Inteligentes S.A., Brazil’s low-fare, low-cost airline, announces that the company will ...

500 Protesters Who Broke Into Brazilian Congress Are in Jail

Members of Brazil’s Movement for Liberation of the Landless (Movimento de Libertação dos Sem ...