Brazil slashes key rate again, more cuts expected
Brazil's monetary policy committee (Copom) followed the market's expectations on Wednesday evening by cutting the key interest rate (the Selic) 75bp to 12.25% from 13.00%.
In a release, the Copom said the decision was unanimous and that "the convergence of inflation to target is compatible with the ongoing monetary easing process."
The latest forecast survey from the central bank shows analysts expecting year-end inflation and the Selic at 4.34% and 9.50%, respectively.
The 2016 consumer price index (IPCA) came in at 6.29%, just below the central bank's target ceiling of 6.5%, according to data from statistics bureau IBGE.
This year's inflation target continues at 4.5%, but the ceiling has been dropped to 6%.
The latest IBGE data, Brazil's provisional consumer price index (IPCA-15), rose 0.54% in the two first weeks of February, the lowest rate for the month since 2012, showing yet another sign that the country is ready for a looser monetary policy.
ON TARGET WITH THE MARKET
"The environment of falling inflation, weak [economic] activity and progress in fiscal measures supports the 75bp rate cut," said Itaú BBA on Wednesday before the Copom announced its latest rate decision.
While the market expects the rate cuts to continue at 75bp, they could reach 100bp "if economic activity weakens and inflation surprises further on the downside," according to Capital Economics.
"For our part, we suspect that the policy rate will continue to be cut in steps of 75bp over the next few meetings - larger cuts would require more progress on fiscal and supply-side reforms," the London-based firm said in a research note. "But for now, with progress remaining slow, we've penciled in the Selic rate to fall to 10% by end-17 - which until recently was more dovish than the market but is now broadly in line."
Subscribe to the leading business intelligence platform in Latin America with different tools for Providers, Contractors, Operators, Government, Legal, Financial and Insurance industries.
News in: Political Risk & Macro (Brazil)
Lula calls for greater diversification of Brazil's mining industry
The president also criticized the country's mining giant Vale.
Brazil providing protection to shield investors from forex risks
Exchange rate risks are one of the main reasons for the lack of international investor interest in certain areas of the economy.
Subscribe to Latin America’s most trusted business intelligence platform.
Other projects
Get key information on thousands of projects in Latin America, from current stage, to capex, related companies, key contacts and more.
- Project: Alto Alegre
- Current stage:
- Updated:
5 months ago
- Project: JURUÁ
- Current stage:
- Updated:
5 months ago
- Project: CACHOEIRINHA
- Current stage:
- Updated:
5 months ago
- Project: Iraúna
- Current stage:
- Updated:
5 months ago
- Project: SÃO MATEUS RIVER
- Current stage:
- Updated:
5 months ago
- Project: Bm-turn-4a
- Current stage:
- Updated:
3 years ago
- Project: GUAIUBA
- Current stage:
- Updated:
5 months ago
- Project: BADEJO
- Current stage:
- Updated:
5 months ago
- Project: BREJINHO
- Current stage:
- Updated:
5 months ago
- Project: BIQUARA
- Current stage:
- Updated:
5 months ago
Other companies in: Political Risk & Macro
Get key information on thousands of companies in Latin America, from projects, to contacts, shareholders, related news and more.
- Company: Richard Hidalgo Vásconez Cía. Ltda.
- Company: Gobierno de la República de Surinam
-
The Government of the Republic of Suriname is the public administration established under its Constitution in 1987. It is composed of the President's office, integrated by the P...
- Company: Asociación de Aseguradores de Chile A.G.  (AACH)
-
Chilean Insurance Assocation A.G. (AACH) is a non-profit association, comprised of 56 insurance companies, incorporated in 1899 to promote the development and protection of insu...
- Company: Gobierno de la República de Chile