Wednesday, July 16, 2014

Brazil holds rate steady at 11.0% "at this moment"

     Brazil's central bank maintained its benchmark Selic rate at 11.0 percent, as expected, saying the decision by its policy committee, known as Copom, was unanimous and without bias.
     The Central Bank of Brazil, which ended its monetary tightening cycle in May after nine rate rises, also repeated the phrase that the decision was "at this moment," seen by economists as a signal that it may change rates in the near future.
     Brazil's inflation rate rose to 6.52 percent in June from 6.37 percent in May, the fifth consecutive month of rising inflation. The central bank targets inflation at a midpoint of 4.5 percent, with an upper limit of 6.5 percent and a lower limit of 2.5 percent.
    In March the central bank raised its 2014 inflation forecast to 6.1 percent due to the impact of drought in the southern part of the country.
    Earlier this month bank President Alexandre Tombini said interest rates at the current level should bring inflation back to the target and it would end below the 6.5 percent ceiling this year.
     From April 2013 to April 2014 the central bank raised the Selic rate by a total of 375 basis points.



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