Central Bank keeps rate steady in first meeting with Ilan Goldfajn

The Monetary Policy Committee (Copom) of the Central Bank kept policy rate Selic steady at 14.25%, in line with market expectations and in a unanimous decision. Now presided by Ilan Goldfajn, the Copom said "the basic scenario and the current balance of risks do not indicate room for monetary policy flexibility." Brazil's base interest rate has been at 14.25% for eight consecutive meetings as the Central Bank fights to reduce resilient inflation. Presenting a more detailed note than before, officials argued that short-term inflation remains above expectations due to food prices, and highlighted lingering uncertainties about the approval of spending cuts and other fiscal adjustments. Yet the Copom conceded that economic adjustments could come more quickly and help recover confidence, lowering inflation expectations that have retreated since the last meeting but are still above the 4.5% target for 2017. Another positive factor pointed by officials is the high output gap of the economy, which can also help lower prices.

Valor Economico