Brazil’s Central Bank lowers basic interest rate to 11.75% a year
The behavior of prices has led Brazil’s Central Bank to lower the country’s interest rates, the Selic rate, for the fourth time in a row. The Monetary Policy Committee (Copom) unanimously reduced the country's benchmark interest rate by 0.5 percentage points to 11.75 percent a year.
In a statement, Copom said it would continue to make further cuts of 0.5 percentage points at future meetings but did not specify when it would stop reducing the Selic rate. According to the bank, the timing will depend on the behavior of inflation in the first half of 2024.
"If the expected scenario is confirmed, the members of the committee unanimously foresee a reduction of the same magnitude at the next meetings and assess that this is the appropriate pace to maintain the contractionary monetary policy necessary for the disinflationary process," Copom said.
Inflation
The Selic rate is the Central Bank's main instrument for keeping official inflation under control, as measured by the Broad National Consumer Price Index (IPCA). In November, the indicator stood at 0.28 percent and has accumulated 4.68 percent in 12 months. After successive falls at the end of the first half, inflation rose again in the second half of the year, but this rise was expected by economists.
The index ended last year above the ceiling of the inflation target. For 2023, the National Monetary Council (CMN) has set an inflation target of 3.25 percent, with a tolerance margin of 1.5 percentage points. The IPCA, therefore, cannot exceed 4.75 percent or fall below 1.75 percent this year.
