Brazilian Selic Rate Hiked to 2.75%

March 18, 2021

As in Turkey, monetary policymakers at the Central Bank of Brazil out-tightened market expectations. The Selic interest rate was raised by 75 basis points, not 50 bps as forecast, to 2.75% in the first hike of any sort since 2015. The rate had been cut five different times last year from February through August by a total of three percentage points. The rate hike announced late yesterday enjoyed unanimous support of the policy-making committee known as Copom. Officials characterized the rate hike as the start of “partial normalization  by reducing the extraordinary degree of monetary stimulus.  GDP ended 2020 growing strongly at the margin, recovering most of its first-semester decline, and inflation expectations rose above target at the relevant horizon for monetary policy. Additionally, inflation projections increased to levels close to the upper bound of the target for 2021.”

Copyright 2021, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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