Economics
Brazil Keeps Low-Rate Guidance as Markets See Inflation Risk
- Policy makers keep possibility of small rate cut on the table
- Central bank held benchmark rate at record low of 2%
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Brazil reinforced plans to hold its benchmark interest rate at a record low for the foreseeable future, downplaying encroaching inflation risks in a move that dragged the currency down.
The central bank, led by its President Roberto Campos Neto, late on Wednesday kept the Selic steady at 2% for a second meeting, as expected by all analysts in a Bloomberg survey. In a statement, policy makers not only wrote that conditions for their forward guidance continue to hold but went as far as keeping the door open for a small rate cut, a possibility that many investors had expected them to rule out.