Central Bank of Brazil

Brazilian Selic Rate Kept at Restrictive 14.25%

July 20, 2016

Between October 2014 and July 2015, Brazilian monetary policymakers increased interest rates by 325 basis points, but a year has now passed since policy has changed.  Under a new governor of the Central Bank of Brazil, the key Selic interest rate was left at 14.25% despite a half-percentage point reduction of consumer price inflation to […] More

Central Bank of Brazil Leaves Policy as Is

June 8, 2016

Copom, the Brazilian monetary policy committee, kept its 14.25% Selic rate unchanged as expected.  Brazil remains deeply in recession, but inflation is twice as much as the 4.5% target and is thus the top concern.  Between October 2014 and July 2015, the Selic Rate was raised from 11% to 14.25% as the plunging real lifted […] More

Chinese Data and a Slew of Japanese Statistical Releases

June 8, 2016

Commodities, commodity-sensitive currencies like the kiwi and rand and other emerging market currencies like the won experienced another strong session.  West Texas Intermediate crude oil is trading marginally above $51 per barrel versus a February low of $26.05.  Gold advanced 0.9% to $1,258.7 per ounce, and copper jumped over 2%. Eurozone sovereign debt yields are under […] More

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 […] More

Central Bank of Brazil

March 3, 2016

Brazil is gripped by an extreme case of stagflation.  In all likelihood, GDP will post a second straight contraction this year of more than 3.0% despite Brazil’s hosting of the summer Olympic Games.  And CPI inflation was 10.7% in January and rising, thanks to the pass-through of real depreciation.  The Zika virus has pressed the […] More

Brazilian Central Bank Flinches

January 21, 2016

The rhetoric late last year from Copom, the monetary policy committee at the Central Bank of Brazil, had encouraged market players to expect another tightening of the Selic interest rate, which from April 2013 to July 2015 had been lifted from 7.25% to 14.25%.  Even though 14.25% represents the highest Selic rate level since October […] More

Central Bank of Brazil Tightens Monetary Policy Again in Face of Accelerating Inflation and Contracting GDP

July 29, 2015

Copom, Brazil’s monetary policy committee, started raising its short-term Selic interest rate from a base of 7.25% in April 2013.  Inflation then of 6.6% was above target and threatening to send inflation expectations upward.  Over the ensuing year to April 2014, the Selic rate was increased by 3.75% to 11%, and policy tightening was put […] More

Central Bank of Brazil

April 29, 2015

As expected, the policymaking committee unanimously agreed to another hike of the Selic interest rate, this time to 13.25% from 12.75%.  It has cumulatively been increased by 150 basis points in 2015, 550 bps since April 2013, and 600 bps since the current tightening cycle began in the spring of 2013.  Brazil’s inflation rate, now […] More

Central Bank of Brazil Tightens Credit Again

March 4, 2015

The monetary policy committee, known as Copom, raised the Selic interest rate by another 50 basis points, matching increases made on January 20 and December 3rd.  There also was a 25-basis point hike last October and 375 basis points of tightening between April 2013 and April 2014.  The new Selic rate level of 12.75% will […] More

Central Bank of Brazil

January 22, 2015

Brazil has several sizable economic imbalances.  Inflation of 6.4% in the year to December is hovering around the top of the 2.5-6.5% target range in spite of the dive in global oil prices.  GDP contracted marginally between the third quarters of 2013 and 3Q14.  The current account and fiscal deficits are excessive, constituting around 4% […] More