Brazil Leaves Key Rate Unchanged at 14.25%


Brazil's central bank maintained its benchmark interest rate at 14.25 percent for the sixth consecutive time at its April 27th meeting, amid political uncertainties ahead of possible presidential impeachment in the next weeks and despite the latest slowdown in inflation rate. Policymakers also said that there is no room for monetary easing due to high inflation expectations.

The decision met market expectations, as central bank governor Alexandre Tombini and other board members warned that inflationary risks remain high and current scenario doesn't allow for a rate cut. 
  
Along with political instability, the economy stayed in recession for the seventh consecutive period in the last quarter of 2015, contracting by 5.9 percent year-on-year. The inflation rate slowed to 9.39 percent in March, reaching the lowest since June of 2015 but remained far above the 6.5 percent upper limit target.

The latest FOCUS Market Readout released on April 22nd by the Central Bank showed analysts from about 100 private financial institutions expect the economy to contract by 3.88 percent in 2016 and advance 0.3 percent in 2017. Annual inflation is expected to slow to 6.98 percent and industrial production to decline 5.8 percent.

Brazil Leaves Key Rate Unchanged at 14.25%


Yekaterina Guchshina | yekaterina@tradingeconomics.com
4/27/2016 11:52:13 PM