RIO DE JANEIRO, BRAZIL – After the Monetary Policy Committee’s (COPOM) decision to lower the SELIC rate by 0.25 percentage points, pushing it to the historic 4.25 percent floor last Wednesday, Brazil became the second to have cut basic interest rates the most in one year, out of a list of 15 countries.
The country lags behind Turkey, which reduced its basic interest rate by 12.75 percentage points in the same period. The survey was conducted by the founder and CEO of Capital Advisors, Charlie Bilello.
The most recent monetary policy decision among the countries listed was that of the Russian Central Bank, announced on Friday. Referring to uncertainties that may affect the global economy, such as the coronavirus, the institution reduced its basic interest rate by 0.25 percentage points, pushing it to 6.00 percent a year.
The decision comes after five successive slacks throughout 2019. “We see room for further cuts,” says Dmitry Dolgin, ING’s chief economist: “Meanwhile, the two main factors of uncertainty, including the coronavirus outbreak, persist”.
However, Turkey tops the list. In a single year, the local Central Bank totaled 12.75 percentage points in interest rate cuts, the latest on January 16th. Soon after comes Brazil, which brought its basic interest rate, the SELIC, down from 6.50 to 4.25 percent last Wednesday.
The COPOM signaled the end of the cycle of monetary relaxation, despite the wave of uncertainty in relation to the global economy. “Despite explaining the interruption in the slackening, the Central Bank’s message is that the next steps will depend on the data. Should there be great frustration with the activity, a relevant change in the global economy (for instance, because of coronavirus) or a sharp decompression in inflation, the COPOM could reduce the SELIC again”, Bradesco points out in a note.
Among other important monetary authorities on the planet, the Fed (US central bank) ranks eighth, with 0.75 percentage points in three cuts over a year. The most recent meeting of the Fed’s leaders resulted in the maintaining of interest rates. On Friday, the Fed released a report in which it says that the potential side effects caused by the coronavirus outbreak in China represent a new risk to the economic outlook.
Source: Infomoney