Central Bank lowers base interest rate to 7.25% and ends cycle of cuts

The Monetary Policy Committee (Copom) of the Central Bank lowered the Selic rate by 0.25 percentage point, to 7.25% a year, and made clear in its statement that the cycle of monetary easing started on August of last year ended with Wednesday's meeting. From now on, the rate will stay put for a “prolonged” period of time. According do Valor Data, with the new cut, the real base interest rate (discounted inflation for the next 12 months) fell to 1.66% a year, one of the lowest in the country's history. The fact that yesterday's decision was not unanimous indicates that Copom was getting ready to end the cycle of interest rate cuts. It's a usual practice for the committee: When decisions stop being unanimous, the next step is changing monetary policy. The interest rate market, which was already expecting the 0.25% percentage point cut to base interest rates announced yesterday by the Central Bank, will now focus on 2013. 

Valor International

11:57 PM (GMT -03:00) – Oct 10 2012