• 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Your email address will not be published.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

Brazilian Muscle Back at the Indy 500 Track

The first day of qualifications for 92nd running of the Indianapolis 500 failed to ...

Chavez Accuses US of Barring Him from Buying Brazilian Planes

President Hugo Chavez said Tuesday that Venezuela would consider buying Russian-built MiG warplanes if ...

Dengue and TB: A Two-Front Battle in Brazil

Brazil government’s actions to control dengue resulted in a 73.3% reduction in the incidence ...

Brazil’s Legendary Politician Miguel Arraes Surviving on Hemodialysis

Brazilian Federal Deputy Miguel Arraes, president of the Brazilian Socialist Party (PSB), who became ...

Brazil Gets Own Branch of Altair Engineering

Michigan, US-based Altair Engineering, Inc., a global maker of advanced engineering software and grid ...

Brazil: Sí£o Paulo’s Big Push to Export

The government of the state of São Paulo, Brazil, plans to increase the number ...

Brazil Authorizes Power Bill Increases of Up to 16%

The electricity sector regulatory agency (Aneel, Agência Nacional de Energia Elétrica) has completed a ...

Brazil Amazon’s Expedition Tries to Prevent Extinction of the Manatee

A expedition that has been studying the situation of the Amazon manatee (Expedição Peixe-Boi ...

Brazilian Stocks Close Upbeat for Carnaval Recess

Latin American stocks were mixed, with Brazilian shares climbing on tame local inflation data ...

The Promising Soccer Boys of Saudi Arabia Train in Brazil

Saudi Arabia's Al Nassr soccer team chose Brazil to promote a series of friendly ...