Brazil’s central bank said domestic and global uncertainties require further monitoring but could improve conditions for the convergence of inflation toward the target in 2017.

Policy makers, led by their President Alexandre Tombini, kept the key rate unchanged at 14.25 percent last week for the fifth straight meeting, matching the median forecast of analysts surveyed by Bloomberg. Two of the eight board members -- Tony Volpon and Sidnei Correa Marques -- voted for a half-point increase to 14.75 percent for the third consecutive meeting, as inflation remains in the double digits.

The dissenters argued an increase would anchor inflation expectations and reduce the risk of missing the target, according to the minutes published on the central bank’s website.

Tombini has said repeatedly in recent weeks he expects inflation to ease in the first half of the year, as the recession further diminishes demand and the government stops raising regulated prices. Analysts surveyed by the central bank bet its next move will be a rate cut in 2017, as political pressure mounts to help revive economic growth.

"The majority of the members of the Copom consider that domestic and mainly international uncertainties justify continuing to monitor the evolution of the macroeconomic scenario to then define the next steps in its monetary policy strategy" according to the majority view published in the minutes to the March 1-2 meeting.

Brazil’s economy contracted 3.9 percent last year, and is expected to shrink 3.5 percent in 2016. Retail sales in January fell by 1.5 percent compared to the previous month, the national statistics agency said separately on Thursday.

Annual inflation slowed last month for the first time since September 2015, while remaining at more than double the official target of 4.5 percent. Consumer price expectations have tumbled in recent days, as bets that Brazil’s political crisis will usher in new leadership caused the currency and other local assets to surge.

Previous rate boosts and the domestic and external environment "can strengthen the scenario for inflation to converge to the target of 4.5 percent in 2017," according to the majority view.

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