Brazil’s central bank raised interest rates by 100 basis points for the third time in a row, now setting the Selic rate to 14.25%. The central bank indicated that a smaller hike may occur in the upcoming meeting due to potential economic slowdown, a decision supported by all surveyed economists.
On Wednesday, Brazil’s central bank implemented a 100 basis points increase in interest rates, marking the third consecutive adjustment. This decision adheres to previous guidance and suggests that a smaller hike may be forthcoming in the next policy meeting, as the bank assesses indications of an economic slowdown. Following this decision, the Selic rate now stands at 14.25%, a level not observed since 2016. The unanimous vote from the bank’s rate-setting committee, known as Copom, reflects the consensus among economists, all 37 of whom surveyed by Reuters anticipated this outcome.
In conclusion, Brazil’s recent interest rate hike reflects a cautious approach by the central bank in response to evolving economic conditions. The decision to increase rates to 14.25% and the indication of a potential smaller hike in the future highlights the central bank’s commitment to monitor economic indicators closely, ensuring strategic adjustments to monetary policy as necessary.
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