Brazil’s Central Bank signals easing of monetary tightening

easing monetary tightening
Central Bank Chairman Roberto Campos Neto. Photo: Fabio Rodrigues Pozzebom/ABr

As markets expected, the Brazilian Central Bank raised benchmark interest rates by 1.5 points to 10.75 percent a year. The Selic rate is now in the double digits for the first time since July 2017.

As we had explained in today’s Brazil Daily newsletter, the move reflects continuing uncertainty about the pace of economic activity — as “the recent Covid wave […] could delay the normalization of global supply chains,” the bank wrote in a statement.

The bank’s Monetary Policy Committee, however, noted that reducing the pace of interest hikes would be the more “adequate” trend for the rest of the year, adding nevertheless that “future policy steps […]  will depend on the evolution of economic activity, on the balance of risks, and on inflation expectations and projections for the relevant horizon for monetary policy.”