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Brazilian Central Bank brings a “hawkish stop” to monetary tightening

The monetary authority did not raise interest rates, but told markets that it will remain vigilant in evaluating how inflation behaves

interest rate "Several underlying inflation measures are above intervals compatible with inflation targets," the Central Bank Monetary Policy Committee said. Photo: Antonio Molina/Folhapress
“Several underlying inflation measures are above intervals compatible with inflation targets,” the Central Bank’s Monetary Policy Committee said. Photo: Antonio Molina/Folhapress

The Brazilian Central Bank on Wednesday interrupted its monetary tightening process and kept the country’s Selic benchmark interest rate at 13.75 percent. It was the first in 13 policy meetings that the bank’s Monetary Policy Committee opted against a rate bump. 

Two of the committee’s nine members voted for a 0.25-point increase, which was the direction some market analysts expected, given that inflation continues at high levels and widespread despite a recent easing in fuel prices. Still, the decision did not catch markets off-guard. Rather, the Central Bank’s comments on the future stood out as more significant than its decision...

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