By Lise Alves, Senior Contributing Reporter
SAO PAULO, BRAZIL – Brazil’s Central Bank (BC) lowered the country’s benchmark interest rates (Selic) for the seventh consecutive time on Wednesday, to 9.25 percentage points per year. With the one percentage point decrease the Selic returns to a single number and reaches its lowest level since October 2013.
In a statement, the Central Bank’s Monetary Policy Committee (Copom) said that political uncertainties have not yet influenced expectations for inflation, but that the rhythm of future cuts will depend on much-needed structural reforms, still to be approved by Congress.
“For the next meeting, the maintenance of this rhythm will depend on the permanence of the conditions described in the basic scenario of Copom and estimates of the extension of the cycle,” stated the Copom note released immediately after the decision.
The Selic is the main instrument used by the country’s Central Bank to keep inflation under control.
Brazil’s President Michel Temer celebrated the reduction of the benchmark interest rate to its lowest level since 2013.
“Interest (rates) below one digit for the first time in four years. Lower inflation in a decade. With responsibility, we are changing Brazil for the better.” said the President through his social network.
The private sector also viewed as positive the continued reduction of interest rates, stating that lower rates will help ease the recession and recover jobs. The National Confederation of Industry (CNI) however called for the government’s commitment to cut spending and Congress to approve economic reforms so that interest rates will not increase in the future.
“The recovery of consumption and investment must be accompanied by structural reforms, such as Social Security, which are fundamental for the balance of public accounts and the consolidation of sustainable growth in the country,” said CNI president Robson Braga de Andrade in a press release.