An Eighth Central Bank Rate Cut for Brazil

July 11, 2012

COPOM, the monetary policy committee at the Central Bank of Brazil, cut its Selic interest rate to 8.0% from 8.5%.  From a peak of 12.5%, the rate was cut earlier by 50 basis points in August, October, November of 2011, and January 2012, then by 75 bps each in March and April of this year, and 50 bps in May.  Like the reduction in May, today’s vote was taken unanimously by COPOM members.  It’s doubtful that 8.0% constitutes the end of the easing cycle, even though it is at a record low.  Real GDP rose in the first quarter just 0.8% at a seasonally adjusted annual rate as well as in on-year terms.  Weak momentum continued last quarter, when retail sales volume tumbled 0.8% in May, the greatest monthly decline since November 2008.  Officials have called inflation risks limited.  Consumer prices advance 5% in the year to May.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



Comments are closed.