Brazil Leaves SELIC Rate at 14.25%

The Central Bank of Brazil kept its key interest rate on hold at 14.25 percent for the seventh straight meeting on June 8th, as policymakers struggle to bring inflation back to target amid a deepening economic recession. The decision was unanimous.

Although inflation rate slowed recently from the 12-year high of 10.71 percent reached in January, it remained well above the central bank's mid-point target of 4.5 percent, lowering the possibilities for interest rate cuts in the short-term while local producers and consumers struggle with high rates and rising loan defaults.

Meanwhile, latest data showed the economy contracted for the eight consecutive period in the first quarter of 2016, falling by 5.4 percent year-on-year, as investment and consumption continued to shrink.

The forecast for the SELIC rate at end-2016 is 12.88 percent, with the prediction for next year at 11.25 percent, according to the latest FOCUS Market Readout released by the central bank on June 3rd. Inflation expectations reached 7.12 percent for 2016 and 5.50 percent for 2017 while the economy is expected to contract by 3.71 percent in 2016 and to grow by 0.85% next year.

Brazil Leaves SELIC Rate at 14.25%

Joana Ferreira |
6/9/2016 12:07:57 AM