In brief: Brazil’s central bank cuts interest rates again

* The monetary policy committee (Copom) of Brazil’s central bank (BCB) has lowered the benchmark interest rate (Selic) to 12.75%. This marks the second consecutive Copom meeting in which the committee voted to lower the Selic. In the previous meeting concluded 2 August, the Selic was lowered from 13.75% to 13.25%. In this latest meeting concluded on 20 September, the decision to lower the Selic by 0.5 percentage points was unanimous among the nine Copom members. According to the statement released by Copom, the rate cut decision was influenced by various economic factors, such as domestic economic activity which “showed stronger resiliency than previously expected”, although the committee “continues to anticipate economic deceleration for the next quarters”. Regarding inflation, Copom stated that “as expected, 12-month headline inflation increased in the recent period” but “various measures of underlying inflation have recently fallen”. Copom projected annual inflation to reach 5.0% by the end of 2023, above the BCB’s target range of 3.25% +/-1.5.

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