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Central Banks

Brazil’s Rate Cut Prospects Dim After Hawkish Central Bank Message

  • Most economists see rate cuts only late this year, or in 2024
  • Central bank is worried about rising inflation expectations
Roberto Campos Neto, Brazil's Central Bank president.

Roberto Campos Neto, Brazil's Central Bank president.

Photographer: Tuane Fernandes/Bloomberg

Brazil economists are delaying their estimates for the beginning of a cycle of interest rate cuts after the central bank voiced concern about rising inflation expectations in a hawkish policy statement.

Policymakers led by Roberto Campos Neto held the benchmark Selic rate at 13.75% on Wednesday, as inflation expectations keep “drifting away” from goals, set at 3.25% for 2023 and 3% for the next two years. The bank, they wrote, considers “that this scenario raises the cost of the disinflation that is needed to reach the targets.”