Latest news with #Copom
Wall Street Journal
a day ago
- Business
- Wall Street Journal
Brazil's Central Bank Pauses Interest-Rate Increases
Brazil's central bank kept interest rates unchanged Wednesday after seven consecutive increases, as signs of an economic slowdown emerge amid above-target inflation. The bank's monetary-policy committee, known as Copom, held its Selic rate at 15% and indicated another hold is likely at its next meeting in November.
Reuters
a day ago
- Business
- Reuters
Brazil pauses rate hikes, signals prolonged hold, eyeing US tariffs
BRASILIA, July 30 (Reuters) - Brazil's central bank held its benchmark interest rate steady on Wednesday, pausing an aggressive tightening cycle after seven consecutive hikes as widely expected, with U.S. tariffs adding to policymakers' heightened caution. The bank's monetary policy committee, known as Copom, kept its benchmark Selic rate at 15.00%, the highest level since July 2006. All 35 economists surveyed by Reuters from July 21-25 had forecast the decision. With stable rates largely priced in, market attention turned to the central bank's statement for any hints on when rate cuts could begin in Latin America's largest economy. But the central bank remained cautious and sought to steer clear of that debate in its policy statement, released the same day that the U.S. Federal Reserve also held rates steady despite political pressure to start cutting borrowing costs. Copom paused its rate-hiking cycle "to examine its yet-to-be-seen cumulative impacts, and then evaluate whether the current interest rate level, assuming it is stable for a very prolonged period, will be enough to ensure the convergence of inflation to the target," policymakers said in their statement. With Brazil bracing for a 50% U.S. tariff - a move that makes it among the trade partners hardest hit by President Donald Trump's policies, despite the exclusion of several key Brazilian exports - the central bank said the global outlook has become more adverse and uncertain. "The committee has been closely monitoring the announcements on tariffs by the U.S. to Brazil, which reinforces its cautious stance in a scenario of heightened uncertainty," it said. Rodolfo Margato, an economist at XP, said the central bank's statement may be read as slightly hawkish by markets, as the central bank kept its inflation forecasts unchanged, while markets had expected a slight downward revision. Still, Margato said there were no elements that would change the course of monetary policy in the short term, and he forecast a first rate cut only in January. Policymakers projected on Wednesday that 12-month inflation will reach 3.4% in the relevant horizon for the bank's current monetary policy decisions, which is now the first quarter of 2027. The figure matches the central bank's June estimate for that period, even after factoring in a tighter interest rate path based on the bank's latest weekly survey of economists. For this year and the next, the central bank kept its inflation forecasts unchanged at 4.9% and 3.6%, respectively. The central bank again warned in its statement that it would not hesitate to resume hikes if deemed necessary. Inflation-adjusted borrowing costs in Brazil are deep in restrictive territory, surpassing even those in Russia and Turkey, helping to attract capital inflows and strengthen the country's currency by about 10% this year and easing some pressure on consumer prices. Even so, Brazil has seen inflation running well above its official 3% target for several months, fueled by an overheated economy, government stimulus measures, and a tight labor market. Market expectations for inflation also remain unanchored from the target in coming years, despite some recent improvement for this year and next, after recent indicators began to show the impact of steep interest rates on credit and cooling economic activity.
France 24
a day ago
- Business
- France 24
Brazil Central Bank holds interest rate as tariffs loom
The bank's decision came after seven straight hikes that had angered leftist President Luiz Inacio Lula da Silva, who argues high rates stifle growth. The bank's Copom monetary policy committee said in a statement it had been "closely monitoring announcements related to the imposition of trade tariffs on Brazil by the United States." A scenario of "greater uncertainty" had informed a cautious stance, it added. Washington earlier announced tariffs of 50 percent on Brazilian goods, with exemptions on key exports including planes, orange juice and pulp, Brazil nuts, and some iron, steel and aluminum products. With the tariffs, US President Donald Trump make good on his threat to wield American economic might to punish Brazil for what he has termed a "witch hunt" against his far-right ally Jair Bolsonaro, on trial for an alleged coup attempt. Unlike the tariffs Trump is slapping on economies around the world, the measures against Brazil have been framed in openly political terms, sweeping aside centuries-old trade ties and a surplus that Brasilia put at $284 million last year. Brazil's benchmark interest rate, known as the Selic, remains at its highest level since 2006, and is one of the highest in the world. The bank had raised the rate seven times in succession in a bid to curb inflation.
Reuters
a day ago
- Business
- Reuters
Brazil central bank pauses tightening after seven straight hikes
BRASILIA, July 30 (Reuters) - Brazil's central bank held its benchmark interest rate steady on Wednesday, pausing an aggressive tightening cycle after seven consecutive hikes as widely expected after a signal last month that it would hold rates for a "very prolonged" period. The bank's monetary policy committee, known as Copom, kept its benchmark Selic rate at 15.00%, the highest since July 2006. All 35 economists surveyed by Reuters between July 21-25 had forecast the decision. With stable rates largely priced in, market attention turned to the central bank's statement for any hints on when rate cuts could begin in Latin America's largest economy. But the central bank remained cautious and sought to steer clear of that debate in its policy statement, released on the same day the U.S. Federal Reserve held rates steady despite political pressure to start cutting borrowing costs. Copom paused its rate-hiking cycle "to examine its yet-to-be-seen cumulative impacts, and then evaluate whether the current interest rate level, assuming it is stable for a very prolonged period, will be enough to ensure the convergence of inflation to the target," policymakers wrote in their statement. Policymakers again warned they would not hesitate to resume hikes if deemed necessary. Inflation-adjusted borrowing costs in Brazil are in deep in restrictive territory, surpassing even those in Russia and Turkey, which has helped attract capital inflows and strengthen the country's currency by about 10% this year, easing some pressure on consumer prices. Even so, Brazil has seen inflation running well above its official 3% target for several months, fueled by an overheated economy, government stimulus measures, and a tight labor market. Market expectations for inflation also remain unanchored from the target in coming years, despite some recent improvement for this year and next, after recent indicators began to show the impact of steep interest rates on credit and cooling economic activity.
Reuters
6 days ago
- Business
- Reuters
Brazil inflation hits 5.3%, central bank set to hold rates next week
SAO PAULO, July 25 (Reuters) - Brazil's inflation remained well above the central bank's target range in its mid-July reading, official data showed on Friday, as policymakers gather next week for a meeting at which they are widely expected to hold interest rates at a two-decade high. Inflation in Latin America's largest economy hit 5.30% in the 12 months through mid-July, statistics agency IBGE said, up from 5.27% a month earlier and slightly above the 5.26% expected by economists in a Reuters poll. Brazil's central bank targets inflation at 3%, plus or minus 1.5 percentage points, and policymakers have pledged to bring it back to that level. The bank delivered 450 basis points in interest rate hikes between September and June, taking the benchmark Selic rate to 15%, the highest since July 2006. It signaled last month a "very prolonged" pause to assess the effects of the hikes. "The mid-month inflation figures give policymakers no reason to consider raising rates again," said Capital Economics' emerging markets economist Kimberley Sperrfechter, who expects conditions to allow for rate cuts around the turn of the year. The central bank's rate-setting committee, known as Copom, is scheduled to meet on July 29 and 30. In the month to mid-July alone, consumer prices as measured by the IPCA-15 index rose 0.33%, up from 0.26% in the previous month. The index had been expected to rise 0.30%, according to the median forecast in a Reuters poll. The monthly increase was driven by higher housing costs as electricity prices climbed, IBGE said, as well as higher transport prices, with airfares jumping. Closely watched food and beverage prices, however, dropped for the second straight month. "Today's result will not influence Copom's decision," Inter senior economist Andre Valerio said. "It should keep interest rates unchanged, reaffirm its commitment to meeting the inflation target, and offer no indication of when it might begin a rate-cutting cycle."
