Breaking News
Investing Pro 0
Cyber Monday Extended SALE: Up to 60% OFF InvestingPro+ CLAIM OFFER

Brazil central bank says a final interest hike was widely debated

Economy Sep 27, 2022 09:54AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. People walk in front the Central Bank headquarters building in Brasilia, Brazil August 25, 2021. REUTERS/Amanda Perobelli

BRASILIA (Reuters) - Brazil's central bank highlighted on Tuesday the lack of consensus among policymakers for its decision last week to pause an aggressive monetary policy cycle, noting that a further "residual" interest rate hike was "widely debated."

In the minutes of its Sept. 20-21 meeting, policymakers reinforced their cautious stance in the fight against inflation, even with more recent data showing an easing of price pressures following cuts by the government to taxes on fuel and energy.

The decision to leave the benchmark Selic interest rate at 13.75% after 12 consecutive hikes came in a vote of 7-to-2, the first split decision since March 2016, with dissenters voting for a final 25-basis-point hike.

"On the one hand, the additional interest rate increase would reinforce the vigilance stance and reflect the observation of a stronger than expected activity," stressed the minutes.

"On the other hand, caution and the need to evaluate, over time, the cumulative effects to be observed of the intense and timely monetary policy cycle already undertaken would be in favor of the maintenance."

Most Copom members concluded that rates were already in significantly contractionary territory, with data and inflation expectations supporting the end of the tightening cycle that has lifted the Selic rate from a record-low 2% in March 2021.

But the central bank again emphasized it could resume hiking if disinflation did not turn out as expected.

The hawkish tone was seen as policymakers attempting to undo market bets on monetary easing from as soon as early 2023 as inflation eases in Latin America's largest economy.

Consumer prices decelerated in the 12 months to mid-September to 7.96%, after running into double digits from September 2021 to July.

The central bank indicated in the minutes that it will be less sensitive to the lower levels it expects to see in the inflation index, said Banco Bradesco in a note to clients.

"We maintain our scenario that the tightening cycle is over and the cuts should only take place from the middle of next year," wrote Director of Research and Economic Studies Fernando Barbosa.

Brazil central bank says a final interest hike was widely debated
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email