Home Americas CBB Cuts Copom Rate to 5.5%

CBB Cuts Copom Rate to 5.5%

Stockholm (Ekonamik) – “The Copom unanimously decided to lower the Selic rate to 5.50% p.a.” stated the Brazilian Central Bank. “The Committee judges that this decision reflects its baseline scenario for prospective inflation and the associated balance of risks, and it is consistent with convergence of inflation to target over the relevant horizon for the conduct of monetary policy, which includes 2020.”

One of the points most emphasised by the Brazilian Central Bank was its fiscal counterpart and the economic reform agenda of the Federal government of President Jair Bolsonaro. In a thinly veiled reference to the stalling reform of public pensions championed by the president’s advisors, the monetary policy committee, emphasised “that persevering in this process is essential for the reduction of its structural interest rate and for sustainable economic recovery. The Committee stresses that the perception of continuation of the reform agenda affects current expectations and macroeconomic projections. In particular, the Committee judges that concrete progress in this agenda is fundamental for the consolidation of the benign scenario for prospective inflation.”

Market analysts had expected the decision. “The statement indicates that another 50-bp ‘adjustment’ of the base rate is likely in the October meeting,” according to Mario Mesquita, Chief Economist at Itaú. “Interestingly, the authorities allude to a hybrid scenario, with a constant exchange rate (at BRL/USD 4.05).“

- Advertisement -

“For now, we expect another 50-bp rate cut in October,” he concluded.

Image by Heiko Behn from Pixabay

Filipe Wallin Albuquerque
Filipe Wallin Albuquerque
Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

Latest articles

Thriving on Covid-19 Challenges

Stockholm (Ekonamik) - Digitalization has certainly mitigated the impact of COVID-19 on businesses, economies and personal lives. After all, digitalization offers the vital infrastructure...

The Battle of Cheap and Expensive

Stockholm (Ekonamik) - The spread of COVID-19 triggered panic among investors in the first quarter of the year and sent markets reeling and company valuations...

Denmark: A Relative Success Story or Too Soon to Tell?

Stockholm (Ekonamik) - Along with a handful of smaller European countries such as Austria and the Netherlands, Denmark is one nation that appears to...

Challenges and Opportunities in Frontier Markets

Stockhom (Ekonamik) - Given the coverage that Europe and the USA have received regarding the effects of COVID-19, it is easy to forget about...