• Categories
  • Archives

Brazil Puts a Brake on Interest Cuts. Key Rate Left at High 11.25%

São Paulo's Brazil Mercantile and Futures Exchange Putting an end to a monetary policy distention which begun over two years ago, the Brazilian Central Bank left this week the benchmark interest rate, Selic, unchanged at 11.25%. According to the Copom, Brazil's Monetary Policy Committee, the decision "to take a pause in the monetary policy flexibilization process was unanimous" following the analysis of "available macroeconomic data."

The decision puts an end to 18 consecutive interest rate cuts begun on September 2005, which brought the Selic down by 8.5 percentage points. Inflation rates in Brazil have been in line with the Central Bank targets in the range of 4/5% annually.

"The Central Bank's caution can be explained by the uncertainty about the international scenario and mid-term inflation", said Roberto Padovani, chief economist from West LB Bank Brazil.

However a number of analysts were expecting a further skim of 0.25 percentage point from the latest meeting of the Copom.

"In growth terms the cost of the decision is low and gives the Central Bank more time to gather data and assess inflationary risks", added Padovani.

Besides the potential mid-term impact of the US financial crisis and international currencies turmoil caused by the plunging US dollar, the Brazilian central bank apparently also took into account the fact that retail sales in Brazil expanded 0.7% last August compared to July, for the eighth month running.

The latest report from the IBGE (Brazilian Institute of Geography and Statistics) showed that clothing, electric appliances and furniture were among the most active items. Compared to the same month a year ago the retail sales increase was 9.9%.

"Retailing is doing very well and has nothing to complain. We can only hope that retailing continues to be the strong boost for industry," said economist Otávio Aidar from Rosenberg & Associates.

The Central Bank monetary committee is scheduled to meet again December 4 and 5.

Mercopress

Tags:

  • Show Comments (0)

Your email address will not be published.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

Brazil’s Minimum Wage Goes Up to US$ 119 a Month, May 1st

The monthly minimum wage increase from US$ 103 (260 reais) to US$ 119 (300 ...

Dengues That Had Disappeared for Decades Are Making Comeback in Brazil

Brazil’s minister of Health, José Gomes Temporão, says there is a possibility that dengue ...

Brazil’s Zero Hunger Is Running Low on Gas and So Is Lula

Of Brazil’s 180 million people, an estimated 46 million go to bed hungry every ...

Central Bank Lowers Brazil’s 2005 GDP Estimate from 3.4% to 2.6%

Brazil’s Central Bank (BC) lowered its estimate for this year’s growth in the Gross ...

Brazil to Sign 15 Accords with Japan and South Korea

Brazilian President Luiz Inácio Lula da Silva, on official trip to South Korea and ...

Rapidinhas

TV Centenary BoobsEternally irreverent bad girl of vaudeville turned TV star and cultural icon ...

April 1995

CONTENTS: Cover story: Springtime for Brazilian movies (p. 8) Hollywood business (p. 13) How ...

Exports from Santa Catarina, Brazil, Grow 20%. US Client Number 1

Brazil's southern state of Santa Catarina saw its exports grow 21.4% from January to ...