Brazilian Selic Rate Left at 10.75%

September 1, 2010

The interest rate policy board, Copom, at the Banco Central do Brasil paused the tightening of its key interest rate as analysts anticipated.  Hikes implemented of 75 bps on April 28, another 75 bps on June 9 and 50 bps on July 21 had reversed two-fifths of the cuts between January 2009 and July 2009.  Inflation of 4.6% is now in the center of the 2.5-6.5% target range, and officials project a continuing ebbing of risks in the inflation outlook.  While growth is buoyant, a pause for a couple of months in raising the key Selic rate can be safely undertaken at this juncture.

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.



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