Brazil’s central bank leaves its key policy rate unchanged at 2%

The Central bank of Brazil left the benchmark interest rate (the Selic rate) unchanged at a record low of 2% on its meeting on October 28. Hence, the policy rate continues to stay below the expected inflation rate of 3.66% for the next 12 months. In the statement after the meeting, the committee acknowledged that the recent figures for the inflation were higher than expected, but this would probably be a temporary observation. 

Brazil’s inflation tends to stay below the target set at 4% for 2020. Until the next meeting, the committee stated that it does not intend to reduce the stimulus measures as long as inflation remains below the target and the fiscal risks do not increase. On the other hand, the committee mentioned that the some industries might struggle in their recovery, as some key global economies could resume some social distancing measures. 

Further data and analysis on Brazil’s economy could be found on the CEIC Brazil Economy in a Snapshot – Q3 2020 report.