By Newsfeed
RIO DE JANEIRO, BRAZIL – The Central Bank’s Monetary Policy Committee maintained Brazil’s benchmark interest rate (Selic) at 6.5 percent for the ninth consecutive meeting, in line with market expectations, and ruled out the possibility of a rate cut in the near future, reiterating it needs time to evaluate the Brazilian economy.
The committee pointed out for the first time that the activity slowdown of late last year continued in the beginning of 2019, but said its baseline scenario contemplates the gradual economic recovery.
Uncertainty about the government’s fiscal reforms and concerns about a global slowdown have kept the bank’s monetary policy committee, known as Copom, in a holding position, but policymakers flagged growing concern about sputtering domestic growth.
In voting unanimously to keep the Selic rate unchanged for the ninth straight meeting, Copom highlighted the longer-term downside risks to inflation from growing slack in the economy.
Some economists think the economy may have shrunk in the first quarter, and there is little to suggest much improvement in the second. Recent data showed a steep fall in industrial output and the first downturn in service sector activity in six months.
But Copom is widely expected to eschew rate cuts and keep the Selic on hold at 6.50 percent all year, partly because slow progress on the government’s pension reform bill is clouding the economic outlook and putting financial markets on edge.
Read More from The Rio Times