Brazil's annual inflation at two-decade low
Brazil's inflation slowed last year to its lowest in nearly 20 years, leaving less room for cuts to the benchmark Selic interest rate, which is at a historic low.
The consumer price index rose 2.95% last year compared with 6.29% in 2016 and the lowest since 1998 when the index increased 1.65%.
Inflation is well below the 4.5% target set by the central bank and also below the target range of 3-6%, marking the first time annual inflation came in below the target since the central bank started tackling inflation in 1999.
Central bank head Ilan Goldfajn (pictured) is required to publish an official letter explaining the reasons behind inflation's performance and central bank strategies. There is no deadline for publication of the letter.
Meanwhile, Brazil's monthly CPI rose 0.44% in December, compared with a 0.28% increase in November, according to statistics agency IBGE.
"It is clear that inflation has started to drift upwards and we expect the headline rate to rise further over the next 12 months. The very low inflation rates seen last year were helped by a collapse in food prices, which is likely to reverse course in 2018," wrote Neil Shearing, an economist at Capital Economics.
"Accordingly, we think a rate cut in February is likely to be the last move in the current easing cycle."
Since October 2016, the monetary authority has cut the policy rate by a total of 725 basis points to the current level of 7% per year. The next rate decision will take place on February 7.
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