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HomeEconomyBrazil's central bank keeps rates unchanged after 12 consecutive rate hikes

Brazil's central bank keeps rates unchanged after 12 consecutive rate hikes

Marcela Ayres

BRASILIA (Reuters) – Brazil’s central bank decided on Wednesday to keep interest rates steady, suspending an aggressive monetary tightening cycle despite policymaking in the United States and other major economies

The bank’s rate-setting committee, known as Copom, voted 7 to 2 to maintain its benchmark Selic rate at

.75% after increases continuously. Of 24 economists polled by Reuters, 24 expected policymakers to keep rates on hold, eight The forecast will eventually raise interest rates by 25 basis points.

At this point, policymakers may have ended the most aggressive rate hike cycle in the world, raising the benchmark rate from a record 2% for March2021 and letting the Brazil is ahead of many central banks that have only recently started raising interest rates.

The Federal Reserve raised interest rates sharply for the third time in a row on Wednesday and again this year.

Brazil’s central bank decided to stop raising interest rates after consumer prices rose for the second straight month in August, helped by fuel and energy tax cuts.

Economists are already debating when Brazil’s interest rates may start falling again – including Economy Minister Paul Guedes himself, who has predicted an early rate cut 2023.

However, central bank directors have adopted a harsher tone in their recent public comments, emphasizing that this is also an early start to discussions on lowering interest rates, as the fight against inflation has not yet Finish.

“The Committee emphasized that future monetary policy steps can be adjusted and will not hesitate to resume the deflationary cycle if the deflationary process does not proceed as expected,” policymakers said in their decision statement wrote in.

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