Brazil inflation eases in Feb, backing up rate cut

March 9, 2012

Brad Haynes Reuters, 03/09/2012 Inflation in Brazil eased in February to its slowest pace for that month in five years, reinforcing the central banks argument for increasingly aggressive interest rate cuts. The benchmark IPCA consumer price index rose 0.45 percent in February, government statistics agency IBGE said on Friday, in line with forecasts. Inflation was the tamest for February since 2007, when consumer prices rose 0.44 percent. Brazils central bank surprised economists on Wednesday by slashing its key rate by 75 basis points to 9.75 percent, after four straight 50-basis-point cuts since August. Read more Leave a Comment | Nation, Politics & Government | Tagged: Brazil Inflation, Brazil interest rate cuts, Brazil IPCA consumer price, Brazil IPCA consumer price index, Brazil selic rate | Permalink Posted by Brazil Institute

Brazil analysts increase 2013 inflation forecast to highest on record

February 27, 2012

Raymond Colitt Bloomberg, 02/27/2012 Economists covering Brazil increased their 2013 inflation forecast to the highest on record after the central bank reiterated it would continue cutting its benchmark lending rate. Brazils consumer prices will rise 5.11 percent next year, according to the median forecast in a Feb. 24 central bank survey of about 100 economists published today, up from the previous weeks estimate of 5.02. Policy makers have cut Brazils benchmark rate 200 basis points since August to 10.5 percent to protect Latin Americas biggest economy from Europes debt crisis and signaled that they will probably lower the rate to a single digit in the near future. Central bank President Alexandre Tombini reiterated on Feb. 26 that the bank will continue to lower borrowing costs further.

ReBrazils three-speed economy

January 27, 2012

Joe Leahy Financial Times, 01/27/2012 Brazils economy is at another of those multi-speed moments that it is becoming known for. Readers will recall that in 2010, the last year in office of President Luiz Incio Lula da Silva, economists complained that Brazil had one foot on the brake and one on the accelerator. The foot on the brake was interest rates as the central bank ramped them up to try to keep inflation under control while the accelerator was, of course, fiscal spending as the outgoing president kept the budgetary pedal to the metal as his anointed successor, Dilma Rousseff, contested an election that year. Now Brazil is in the strange position of having record low unemployment 4.7 per cent in December compared with 5.2 per cent in November, even as its economy crawled along at near zero rates of growth in the third and fourth quarters. ad more Leave a Comment | Commentary & Analysis, Trade, Economy and Development | Tagged: Brazil Inflation, Brazil interest rate, Brazil selic rate, Brazil Unemployment | Permalink Posted by Brazil Institute

Brazils central bank sees Selic rate falling to single digit

January 26, 2012

Matthew Bristow and Raymond Colitt Bloomberg, 01/26/2012 Brazils central bank said it sees a high chance of the benchmark Selic rate falling to a single digit, after cutting the rate last week for a fourth straight time to 10.5 percent. The banks board, led by President Alexandre Tombini, said it sees significant structural changes in Brazils economy that will allow for lower interest rates, according to the minutes from its Jan. 17-18 meeting published today. The monetary policy committee, known as Copom, also cited a budget surplus before interest payments that will allow the ratio of public debt to gross domestic product to fall and slow the pace of credit market expansion for their decision.

Considering that the deceleration of the Brazilian economy in the second half of last year was bigger than expected and that recent events indicate a final solution for the European crisis will be delayed, at this moment, the Copom sees a high probability for to the realization of an outlook in which the Selic rate moves toward a one digit level, the minutes said. Read more Leave a Comment | Nation, Politics & Government | Tagged: Alexandre Tombini, Brazil banco federal, brazil central bank, Brazil selic rate | Permalink Posted by Brazil Institute

Brazil 2012 inflation views fall to 3-month low

December 28, 2011

Brad Haynes, Guillermo Parra-Bernal and Asher Levine - Reuters, 12/26/2011

The Botafogo neighborhood is seen with the famous Sugar Loaf Mountain in the background in Rio de Janeiro February 24, 2011. REUTERS/Ricardo Moraes Economists trimmed forecasts for inflation in Brazil next year to the lowest level in more than three months, a central bank weekly survey showed on Monday, as a deteriorating global economy helps ease price pressures.

Forecasts for Brazils benchmark inflation rate in 2012 fell to 5.33 percent from 5.39 percent previously, down for the fourth week in a row, according to the central banks Focus survey for the week ending December 23. The central bank expects inflation at 4.7 percent next year. The outlook for economic growth this year fell to 2.90 percent in the survey, from 2.92 percent previously, the fifth straight weekly reduction. Weaker growth due to tumbling industrial output and faltering retail sales led the central bank to cut its benchmark Selic lending rate last month for the third straight meeting, to 11 percent. Read more Leave a Comment | Trade, Economy and Development | Tagged: 2012 economic growth, Brazil 2012 inflation, brazil central bank, Brazil selic rate | Permalink Posted by Brazil Institute

Brazil has the highest real interest rate among 40 leading economies
December 1, 2011

Consumer loan rates in Brazil are also among the highest in the world Mercopress, 12/01/2011 The Brazilian Central bank latest decision to lower the basic interest rate by half a percentage point to 11%, confirms Brazil leadership as the country with the highest real interest rates in the world. An honour it has held interruptedly for the last 23 months.

Brazil took first place in January 2010 when it jumped from its traditional long established second ranking, according to a paper from Cruzeiro do Sul Corretora international analyst Jason Vieira, who ranks real interest rates for the forty major economies of the world. With the latest decision, Brazils real interest rate leads with 5.1% annually, followed by Hungary with 2.5%. The basic real rate is obtained by subtracting from the nominal rate the expected inflation for the next twelve months. Read more Leave a Comment | Nation, Politics & Government | Tagged: brazil central bank, Brazil consumer loan rates, Brazil real interest rate, Brazil selic rate | Permalink Posted by Brazil Institute

Brazil signals rate reductions to continue after cutting to 11%

December 1, 2011

Matthew Bristow and Andre Soliani Businessweek, 12/01/2011 Brazils central bank signaled it will keep cutting interest rates at its current half-point pace as it tries to prevent Europes spreading debt crisis from stunting growth in Latin Americas biggest economy. The banks board, led by President Alexandre Tombini, yesterday voted unanimously to reduce the benchmark rate 50 basis points for a third straight meeting, to 11 percent, matching the forecast by 64 of 65 analysts surveyed by Bloomberg. Policy makers, in a statement identical to the one from their previous meeting, said that moderate rate cuts can mitigate the effects of the worsening global economy without putting at risk its 2012 inflation target. Tombinis commitment to the current pace of rate cuts may lead traders to pare bets on bigger reductions to come, said Jankiel Santos, chief economist at Espirito Santo Investment Bank. Read more Leave a Comment | Trade, Economy and Development | Tagged: Alexandre Tombini, brazil central bank, Brazil interest rates, Brazil selic rate, Eurozone debt crisis | Permalink Posted by Brazil Institute Previous Entries

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Brazil Central Bank Cuts Selic Rate 50bps To 10.50%

By CentralBankNews on January 19, 2012 | More Posts By CentralBankNews | Author's Website

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The Banco Central Do Brasil cut the Selic interest rate by another 50 basis points to 10.50% from 11.00% previously. In its statement, Brazils Central Bank Monetary Policy Committee (Copom) said [translated]: The Monetary Policy Committee believes that the timely mitigate the effects coming from a more restrictive global environment, a moderate adjustment in the level of the base rate is consistent with the scenario of convergence of inflation to the target in 2012.

Brazils central bank previously cut the rate by 50 basis points in November, October and September, after raising the Selic rate by 25 basis points to 12.50% at the June Copom meeting last year, which at the time amounted to total tightening for the year of 175 basis points. Brazil reported an annual inflation rate of 6.5% in December, compared to 7.31% in September, 7.23% in August, 6.87% in July, 6.71% in June, and 6.55% in May, and just outside the official inflation target of 4.50% +/-2% (2.56.5%). The BRIC emerging market economy grew 0.0% q/q in the September quarter (0.7% in June, 0.8% in March), placing annual growth at 2.1% (3.1% in Q2, and 4.2% in Q1). The Brazilian Real (BRL) has weakened about 7% against the US dollar over the past year, while the USDBRL exchange rate last traded around 1.77

Monetary Policy Week in Review - 22 Oct 2011 0 comments

Oct 21, 2011 10:03 PM | about stocks: TF, NORW, BZF, EPHE, TUR, CUD, INR, AUNZ, JYN, FXS, COLX, FXRU The past week in monetary policy saw interest rate decisions announced by 7 central banks. The only bank to announce a change to its main monetary policy interest rate was the Banco Central do Brasil, which cut its interest rate by another 50 basis points to 11.50%. Meanwhile the other central banks held their key interest rates unchanged: Botswana 9.50%, Norway 2.25%, Thailand 3.50%, Ghana 12.50%, Philippines 4.50%, and Turkey 5.75%. A common theme mentioned by the central bankers was concern over signs of slowing global growth and the potential risks arising from the ongoing sovereign debt crisis in Europe.

Some of the key quotes and soundbites from central bankers announcing monetary policy decisions during the past week are included below:
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Banco Central do Brasil (cut rate -50bps to 11.50%): "Continuing the process of adjusting monetary conditions, the Committee decided

unanimously to reduce the Selic rate to 11.50% pa, without bias. The Monetary Policy Committee believes that the timely mitigate the effects coming from a more restrictive global environment, a moderate adjustment in the level of the base rate is consistent with the scenario of convergence of inflation to the target in 2012." Bank of Thailand (held rate at 3.50%): "The MPC deemed that the current level of the policy rate is appropriate in addressing upcoming inflationary pressure and supporting economic adjustments amidst heightened uncertainty in the global economy. Meanwhile, with the floods not yet over, their impact on the economy was not fully evident." Central Bank of Turkey (held rate at 5.75%): "Recent data releases suggest that there will be a notable reduction in economic growth in the second half of the year. External demand remains weak, and domestic demand continues to slow down. The deceleration in credit growth and domestic demand combined with the exchange rate movements have been contributing to the rebalancing of domestic and external demand. Accordingly, the Committee expects a significant improvement in the current account balance in the forthcoming period." Norges Bank (held rate at 2.25%): "The Executive Board is of the view that the outlook and the balance of risks now suggest that the key policy rate should be kept at the current level for some time ahead. If the economic unrest abroad intensifies, money market premiums remain high and the outlook for growth and inflation weakens further, the key rate may be reduced. If financial market turbulence subsides and there are prospects of higher growth and inflation, the key rate may rise." Bank of Botswana (held rate at 9.50%): "While short-term price developments have resulted in inflation remaining above the objective range of 3 - 6 percent, the medium-term outlook for consumer prices is more encouraging. As a result, the Committee judged that maintaining the Bank Rate at the current level is consistent with inflation converging on the objective range in the medium term." Bank of Ghana (held rate at 12.50%): "Looking ahead, wage pressures, payment arrears and recent depreciation of the exchange rate have increased the upside risks to inflation. In the short-term, the impact of these underlying inflationary pressures on the economy remains contained. The Bank's inflation forecasts show that the end year target will be achieved. Movements in the exchange rate remain consistent with the delivery of the Bank's inflation target."

Looking at the central bank calendar, next week will be reasonably busy in monetary policy with 9 central banks scheduled to review monetary policy settings. Also on the radar is the ECB's bank lending survey, due out on Wednesday (and of course the EU leaders are meeting this weekend to try and agree on a plan to stem contagion from the sovereign debt crisis). The key announcements to watch will be Canada, India, Japan, and Russia.