Brazil Leaves Key Rate at 14.25%


The central bank of Brazil left its benchmark SELIC rate on hold at 14.25 percent on August 31st 2016. Policymakers said the inflation has been easing at a slower pace than expected although there is evidence the economy has stabilized and signs of a possible gradual recovery.

 The decision was widely expected by markets.
 
The key rate was left unchanged at a ten-year high for the ninth consecutive time as the central bank struggles to curb high inflation amid a severe contraction. The economy shrank 0.6 percent on quarter in the three months to June of 2016, sixth straight quarter of contraction although investment rose for the first time in nearly three years. Meanwhile, the inflation rate eased for the second month to 8.74 percent in July, reaching the lowest since May of 2015.
 
Policymakers expect the inflation to be around 7.3 percent this year, well above the mid-point target of 4.5 percent and due to food prices. 

Brazil Leaves Key Rate at 14.25%


Joana Taborda | joana.taborda@tradingeconomics.com
8/31/2016 10:29:31 PM