On Wednesday, Brazil’s Central Bank announced a 0.75 percent reduction of the country’s basic interest rate to 13 percent per year. It marks the third straight occasion that the bank’s Monetary Policy Committee decided to slash Brazil’s interest rate.
Although everyone expected a lowering of the Selic rate, the 0.75 percent reduction came as a surprise. Only four of 48 economists consulted by Bloomberg anticipated such a move. Markets expected a more conservative approach, a 0.50 percent reduction.
Lower inflation rate
Moreover, the announcement came on the same day that the Brazilian Institute of Geography and Statistics published the 2016 inflation rate: 6.29 percent. Indeed, this is the first time in two years that Brazil managed to end the year within the government’s target range.