Central Bank of Brazil

April 27, 2016

The Brazilian Selic rate was retained at 14.25%.  It’s been at that level since a 50-basis point hike at the end of last July, which culminated 325 basis points of increases since October 2014.  The tightening was prompted by a huge inflation overshoot relative to the 4.5% target, fueled by real depreciation.  Although inflation has crested and begun settling back, it still exceeds 9.0%, and officials acknowledge that a near-term cut is unlikely.  Brazil’s top central bank management will soon undergo an overhaul, creating uncertainty regarding the continuity of the current efforts that are addressing inflation but also constrained by the economy’s deep recession.

Copyright 2016, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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