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Brazil: Central bank leaves rates unchanged, on a slip vote

FXStreet (Córdoba) - Yesterday, as expected, the Central Bank of Brazil, left the reference interest rate (Selic) unchanged at 14.25%. The real dropped against the US dollar following the decision and after the arrest of a senator and an investment banker CEO as a part of the Petrobras scandal.

In its statement the COPOM said: “Assessing the macroeconomic scenario and the inflation prospects, the Copom decided to maintain the Selic rate at 14.25 percent, without bias, with 6 votes for the monetary policy action and 2 votes in favor of increasing the Selic rate by 50 basis points.”

Brazil faces a problem of high inflation (CPI above 10%) and an economic recession. If the inflation continues to advance, it could force the CBB to raise rates further while if it stabilizes, some analysts see a possibility of rate cuts during 2016 to boost the economy.

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