Good morning! Today, we talk about the latest policy rate decision by Brazil’s Central Bank. What is going on with Lula’s approval numbers. And how the floods in southern Brazil will affect inflation.
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Central Bank slows down on monetary easing
The Central Bank’s Monetary Policy Committee on Wednesday cut Brazil’s benchmark interest rate by 0.25 percentage points to 10.5 percent. While a cut was widely expected, we flagged a month ago that the economic conditions both in Brazil and abroad made it less likely for the committee to continue its magnitude of easing. The six previous policy meetings had seen 0.5 percentage point cuts to the Selic rate.
Be smart. In its statement, the committee said it “has followed closely the recent developments on the fiscal side and their impacts on monetary policy,” adding that “a credible fiscal policy, committed to debt sustainability” will impact monetary policy.
- The ink on the fiscal framework approved last year is barely dry, and the government has already asked for an easier primary...