Brazil's central bank reduced its benchmark interest rate by 25 basis points for the fourth consecutive meeting, following fresh data indicating a slowdown in economic growth and a sharper-than-expected decline in inflation.
Led by Governor Gabriel Galípolo, the central bank's board members lowered the benchmark Selic rate to 14% on Wednesday evening, aligning with the forecasts of all economists surveyed by Bloomberg. This brings the total cumulative rate cuts to 100 basis points since March. The decision was unanimous, with policymakers offering no forward guidance and stating that future moves will depend on upcoming data.
"The total magnitude of this calibration cycle will be determined by new information, aiming to ensure inflation converges toward the target," they wrote in the statement accompanying the rate decision. Central bank policymakers are currently benefiting from a slightly improved short-term inflation outlook, with consumer price increases in June and early July coming in below expectations.
Meanwhile, economic activity is gradually losing momentum as the services sector and industrial output weaken. Despite rates remaining at a restrictive level, inflation expectations for the first quarter of 2028 still exceed the 3% target.
Comments