Money in Brazil
Brazil - Money
Central Bank holds SELIC rate at 6.50% but warns downside risks have increased
At its 18–19 September meeting, the Central Bank of Brazil’s Monetary Policy Committee (Comité de Politica Monetaria, COPOM) unanimously decided to keep the benchmark SELIC interest rate at its record low of 6.50%. The decision matched market analysts’ expectations. The Central Bank paused the long and aggressive easing cycle that began at the end of 2016 at its May meeting.
The decision to hold the SELIC rate unchanged was motivated by weak economic growth and manageable underlying inflation. However, the Bank considers both the risk of stalling economic reforms following October’s elections and vulnerability of emerging economies to have increased, both of which could fuel inflation going forward. On the other hand, the Brazilian economy’s weak pace of recovery and anchored inflation expectations could translate into lower-than-expected inflation.
The Bank revised its inflation expectation for 2019 upward but lowered this year’s projections, seeing year-end inflation of around 4.1% (previously: 4.2%). Next year, the Bank sees inflation ending 2019 at 4.0% (previously: 3.8%), assuming the SELIC rate concludes the year at 8.00% and the real at 3.75 per USD. However, overall, the statement struck a slightly more hawkish tone than in the previous meeting in August, explicitly stating that the gradual removal of stimulus is on the cards and will depend on the evolution of both the inflation outlook and the balance of risks.
Brazil Interest Rate Forecast
Met the why particular Consensus Forecast participants see the SELIC rate closing 2018 at 6.72% and 2019 at 8.02%.
Brazil - Money Data
|Money (annual variation in %)||11.9||9.9||6.3||3.8||4.8|
5 years of economic forecasts for more than 30 economic indicators.
Brazil Money Chart
Source: Central Bank of Brazil.
|Bond Yield||11.86||-0.82 %||Oct 11|
|Exchange Rate||3.78||-0.13 %||Oct 12|
|Stock Market||82,921||-0.11 %||Oct 11|
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October 9, 2018
Right-wing congressmen and former army captain, Jair Bolsonaro, won a larger than expected victory in the 7 October presidential elections, although failed to capture Brazil’s top job in the first round.
October 5, 2018
Consumer prices rose 0.48% in September over the previous month, contrasting August’s 0.09% fall.
October 3, 2018
In July, economic activity increased 0.6% from the previous month in seasonally-adjusted terms, according to the Central Bank’s monthly indicator for economic activity (IBC-Br, Indice de Atividade Economica do Banco Central).
October 2, 2018
Industrial production contracted for a second month in a row in August.
October 2, 2018
Conditions in Brazil’s manufacturing sector deteriorated in September.