Brazil Cuts Interest Rate Another Half-point
Muhammad Irfan Published December 14, 2023 | 05:24 PM
Brazil's central bank cut its key interest rate by half a point for the fourth straight time Wednesday, continuing the easing President Luiz Inacio Lula da Silva hopes will spur Latin America's biggest economy
Brasília, (UrduPoint / Pakistan Point News - 14th Dec, 2023) Brazil's central bank cut its key interest rate by half a point for the fourth straight time Wednesday, continuing the easing President Luiz Inacio Lula da Silva hopes will spur Latin America's biggest economy.
In line with analyst forecasts, the bank's monetary policy committee said its members had voted unanimously to lower the benchmark Selic rate to 11.75 percent in their final meeting of the year.
"The committee's members unanimously expect reductions of the same magnitude in their coming meetings, and see that as the appropriate pace to maintain disinflation," the committee said in a statement.
Brazil's annual inflation rate fell to 4.68 percent in November, returning within the central bank's current target range of 1.75 to 4.75 percent.
Analysts had said that made it all but certain the bank would keep up the cycle of steady interest rate cuts it began in August, which ended a hawkish cycle of inflation-fighting moves.
Haunted by a history of hyperinflation, Brazil had gone on one of the most aggressive monetary tightening cycles in the world when the Covid-19 pandemic and then Russia's invasion of Ukraine sent global prices on an upward spiral in early 2021.
Brazil, which had the world's highest real interest rate -- subtracting inflation -- before the current easing cycle began, now has the second-highest, after Mexico, according to financial site MoneYou.
Veteran leftist Lula has pushed hard for interest rate cuts, saying a high Selic is "irrational" and stunting Brazil's growth.
He renewed the call Tuesday, saying he hoped to "touch the heart" of central bank chief Roberto Campos Neto, calling for monetary policy to help further his government's poverty-fighting agenda.
The central bank also faces pressure from industry.
The National Confederation of Industry (CNI) said in a statement the latest rate cut was "excessively conservative, damaging economic activity."
"More aggressive monetary policy is possible and necessary to bring down the cost of credit for businesses and consumers," CNI president Ricardo Alban said in a statement.
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