Brazilian Central Bank considers possible cut in key interest rate in light of falling inflation
The Central Bank of Brazil has indicated that if the ongoing disinflationary trend continues, it may consider revising the country’s basic interest rate, known as the Selic.
The minutes of the Monetary Policy Committee (Copom) meeting were published, stating that while there were differing views among committee members, the prevailing assessment is that a change in Brazil’s interest rate scenario may be on the horizon at the next meeting in August.
The Central Bank highlighted the importance of the disinflationary process and its impact on expectations as a factor that could instill confidence and initiate a cautious adjustment in the Selic rate.
However, some members expressed caution, noting the need for greater stabilization of long-term expectations and further evidence of disinflation in cyclical components.
The Copom minutes emphasized that future monetary policy decisions would depend on several factors, including inflation dynamics, inflation expectations, the Central Bank’s own inflation projections, the output gap, and the balance of risks.
The Selic rate has been held at 13.75% per year for the seventh consecutive meeting, in line with market expectations.
The financial market anticipates a reduction in interest rates starting from the next Copom meeting on August 2.
President Luiz Inácio Lula da Silva and his allies have criticized the level of interest rates, with President Lula expressing disagreement with the Central Bank’s stance.
Brazil’s annual inflation has been on a downward trajectory, with the IPCA decelerating for 11 consecutive months.
The inflation target for 2023 is 3.25%, with a tolerance range of 1.75% to 4.75%.
The Copom meeting held on June 21 was the last under former President Jair Bolsonaro.
In the upcoming meeting, Gabriel Galípolo and Ailton Aquino are expected to assume the positions of Monetary Policy and Surveillance directors, subject to approval by the Senate’s Economic Affairs Committee.
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Brazil — Live Market Board
-0.41%
171,201.60
-0.41%
65,770.85
+0.06%
11,404.17
-1.16%
2,973,262
-0.73%
2,500.09
-0.42%
60,117.56
-0.21%
| Instrument | Last | Change | YoY | Prev. | High | Low | Volume |
|---|---|---|---|---|---|---|---|
| IBOV | 171,201.60 | -0.41% | +21.85% | 171,906.72 | 168,310 | 167,142 | — |
| USD/BRL | 5.16 | +0.01% | -5.13% | 5.16 | 5.18 | 5.14 | — |
| SELIC | 14.00% | — | — | — | — | — | |
| PETR4 | 41.64 | -0.05% | +35.19% | 41.66 | 41.97 | 41.15 | 41,499,400 |
| VALE3 | 72.97 | +0.83% | +30.75% | 72.37 | 73.54 | 72.66 | 17,658,000 |
| ITUB4 | 38.60 | -1.03% | +4.57% | 39.00 | 39.34 | 38.39 | 29,487,800 |
| BBDC4 | 16.85 | +0.36% | +3.50% | 16.79 | 16.90 | 16.67 | 19,416,900 |
| BBAS3 | 19.37 | +0.47% | +0.73% | 19.28 | 19.44 | 19.16 | 11,069,200 |
| B3SA3 | 14.26 | -0.21% | +12.73% | 14.29 | 14.47 | 14.11 | 33,037,800 |
| ABEV3 | 14.89 | -0.80% | +21.91% | 15.01 | 15.07 | 14.81 | 16,453,100 |
| WEGE3 | 47.59 | +0.49% | +29.99% | 47.36 | 48.08 | 47.36 | 3,364,600 |
| PRIO3 | 59.14 | -0.19% | +50.67% | 59.25 | 59.81 | 58.74 | 3,325,600 |
| SUZB3 | 41.33 | +2.35% | -23.55% | 40.38 | 41.48 | 40.35 | 3,914,900 |
| RENT3 | 34.68 | -0.09% | +0.84% | 34.71 | 34.96 | 34.35 | 7,979,100 |
| AZZA3 | 15.89 | -2.63% | -53.76% | 16.32 | 16.42 | 15.82 | 1,330,300 |
| CSNA3 | 4.30 | +0.47% | -42.65% | 4.28 | 4.41 | 4.26 | 10,076,100 |
| GGBR4 | 24.69 | +2.19% | +51.38% | 24.16 | 24.85 | 24.18 | 7,047,600 |
| ENEV3 | 24.21 | -1.38% | +70.49% | 24.55 | 24.64 | 23.99 | 9,297,000 |
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