Latest news with #Copom
CNBC
07-05-2025
- Business
- CNBC
Brazil central bank hikes rates to near 20-year high, leaves next steps open
The Central Bank of Brazil headquarters in Brasilia, Brazil, on Thursday, Jan. 2, 2025. Brazil's central bank raised interest rates by 50 basis points Wednesday in a sixth straight hike that pushed borrowing costs to their highest in nearly 20 years, and left future steps open amid global uncertainties and sticky domestic inflation. The bank's monetary policy committee, known as Copom, raised the Selic to 14.75% in a unanimous decision, matching forecasts from 32 of 35 economists in a Reuters poll. Policymakers stressed that the current environment calls for a "significantly contractionary monetary policy for a prolonged period" to bring inflation to target, dropping previous language about the need for "a more contractionary" stance. "For the next meeting, the scenario of heightened uncertainty, combined with the advanced stage of the current monetary policy cycle and its cumulative impacts yet to be observed, requires additional caution in the monetary policy action and flexibility to incorporate data that impact the inflation outlook," they added in the decision's statement. Flavio Serrano, chief economist at BMG Bank, said the central bank left the door open for a smaller rate hike in June if needed, though he sees it as unlikely. "My base case is zero increase in June, holding at 14.75%. There may be room for a cut at the very end of the year, depending on how the outlook evolves," he said. In March, the central bank had already flagged the need for further tightening this month, though at a slower pace than the previous three 100 basis-point hikes. With Wednesday's move - announced just hours after the U.S. Federal Reserve held rates steady but cited the risk of rising inflation and unemployment - the Selic benchmark rate has now reached its highest level since August 2006. The sky-high rates come against a backdrop of a 5.49% annual inflation rate, well above the official 3% goal, with markets skeptical that inflation will return to target even by as far out as 2028. The aggressive tightening has added 425 basis points to the benchmark rate since September, but policymakers stressed on Wednesday they observe "an incipient moderation in growth," with indicators of domestic economic activity and the labor market still exhibiting strength. GLOBAL UNCERTAINTIES Now, however, the inflation risk balance is no longer described as tilted to the upside, but rather as featuring higher-than-usual risks on both sides - including a new disinflationary risk tied to falling commodity prices. "Indeed, the external scenario points to a greater disinflationary outlook than previously expected, which could support a pause in monetary tightening as early as June," said Rafaela Vitoria, chief economist at lender Inter. Global uncertainties, triggered by sweeping U.S. trade tariffs that have clouded the outlook for the world's largest economy, have led Copom members to emphasize the need for greater caution and flexibility in remarks ahead of the decision. The current environment, they previously argued, not only limits their ability to provide any guidance but also requires policymakers to consider a broader and diverse set of data to assess whether monetary policy is achieving its intended effects. Their concern about the trajectory of Latin America's largest economy came despite some favorable inflationary developments since the Brazilian central bank's latest policy meeting, including a stronger currency BRBY and lower commodity prices. On the other hand, the government of President Luiz Inacio Lula da Silva has unveiled new stimulus measures, such as changes to rules governing payroll-deductible loans, as it struggles to reverse a plunge in the leftist leader's approval ratings. Considering changes in macroeconomic conditions, Brazil's central bank on Wednesday lowered its 2025 inflation forecast to 4.8%, down from 5.1% projected in March. For the fourth quarter of 2026, the period most influenced by current monetary policy decisions, the bank now projects the 12-month inflation rate to reach 3.6%, down from 3.7% estimated in the quarterly monetary policy report released late March.
Yahoo
07-05-2025
- Business
- Yahoo
Brazil central bank hikes rates to near 20-year high, leaves next steps open
By Marcela Ayres BRASILIA (Reuters) -Brazil's central bank raised interest rates by 50 basis points on Wednesday in a sixth straight hike that pushed borrowing costs to their highest in nearly 20 years, and left future steps open amid global uncertainties and sticky domestic inflation. The bank's monetary policy committee, known as Copom, raised the Selic to 14.75% in a unanimous decision, matching forecasts from 32 of 35 economists in a Reuters poll. "For the next meeting, the scenario of heightened uncertainty, combined with the advanced stage of the current monetary policy cycle and its cumulative impacts yet to be observed, requires additional caution in the monetary policy action and flexibility to incorporate data that impact the inflation outlook," policymakers said in the statement from the decision. In March, the central bank had already flagged the need for further tightening, though at a slower pace than the previous three 100 basis-point hikes. With Wednesday's move - announced just hours after the U.S. Federal Reserve held rates steady but cited the risk of rising inflation and unemployment - the Selic benchmark rate has now reached its highest level since August 2006. The sky-high rates come against a backdrop of a 5.49% annual inflation rate, well above the official 3% goal, with markets skeptical that inflation will return to target even by as far out as 2028. The aggressive tightening has added 425 basis points to the benchmark rate since September, but policymakers stressed on Wednesday they observe "an incipient moderation in growth," with indicators of domestic economic activity and the labor market still exhibiting strength. Global uncertainties, triggered by sweeping U.S. trade tariffs that have clouded the outlook for the world's largest economy, have led Copom members to emphasize the need for greater caution and flexibility in remarks ahead of the decision. The current environment, they argued, not only limits their ability to provide any guidance but also requires policymakers to consider a broader and diverse set of data to assess whether monetary policy is achieving its intended effects. Their concern about the trajectory of Latin America's largest economy came despite some favorable inflationary developments since the Brazilian central bank's latest policy meeting, including a stronger currency and lower commodity prices. On the other hand, the government of President Luiz Inacio Lula da Silva has unveiled new stimulus measures, such as changes to rules governing payroll-deductible loans, as it struggles to reverse a plunge in the leftist leader's approval ratings.
Reuters
07-05-2025
- Business
- Reuters
Brazil central bank hikes rates to near 20-year high, leaves next steps open
BRASILIA, May 7 (Reuters) - Brazil's central bank raised interest rates by 50 basis points on Wednesday in a sixth straight hike that pushed borrowing costs to their highest in nearly 20 years, and left future steps open amid global uncertainties and sticky domestic inflation. The bank's monetary policy committee, known as Copom, raised the Selic to 14.75% in a unanimous decision, matching forecasts from 32 of 35 economists in a Reuters poll. "For the next meeting, the scenario of heightened uncertainty, combined with the advanced stage of the current monetary policy cycle and its cumulative impacts yet to be observed, requires additional caution in the monetary policy action and flexibility to incorporate data that impact the inflation outlook," policymakers said in the statement from the decision. In March, the central bank had already flagged the need for further tightening, though at a slower pace than the previous three 100 basis-point hikes. With Wednesday's move - announced just hours after the U.S. Federal Reserve held rates steady but cited the risk of rising inflation and unemployment - the Selic benchmark rate has now reached its highest level since August 2006. The sky-high rates come against a backdrop of a 5.49% annual inflation rate, well above the official 3% goal, with markets skeptical that inflation will return to target even by as far out as 2028. The aggressive tightening has added 425 basis points to the benchmark rate since September, but policymakers stressed on Wednesday they observe "an incipient moderation in growth," with indicators of domestic economic activity and the labor market still exhibiting strength. Global uncertainties, triggered by sweeping U.S. trade tariffs that have clouded the outlook for the world's largest economy, have led Copom members to emphasize the need for greater caution and flexibility in remarks ahead of the decision. The current environment, they argued, not only limits their ability to provide any guidance but also requires policymakers to consider a broader and diverse set of data to assess whether monetary policy is achieving its intended effects. Their concern about the trajectory of Latin America's largest economy came despite some favorable inflationary developments since the Brazilian central bank's latest policy meeting, including a stronger currency and lower commodity prices. On the other hand, the government of President Luiz Inacio Lula da Silva has unveiled new stimulus measures, such as changes to rules governing payroll-deductible loans, as it struggles to reverse a plunge in the leftist leader's approval ratings. Considering changes in macroeconomic conditions, Brazil's central bank on Wednesday lowered its 2025 inflation forecast to 4.8%, down from 5.1% projected in March. For the fourth quarter of 2026, the period most influenced by current monetary policy decisions, the bank now projects the 12-month inflation rate to reach 3.6%, down from 3.7% estimated in the quarterly monetary policy report released late March.
Reuters
19-03-2025
- Business
- Reuters
Brazil raises interest rates 100 bps, sees smaller hike ahead
BRASILIA, March 19 (Reuters) - Brazil's central bank raised interest rates by 100 basis points on Wednesday for the third consecutive time, sticking to previous guidance, and signaled a smaller rate hike at its next policy meeting as it monitors signs of an economic slowdown. The bank's rate-setting committee, known as Copom, lifted the benchmark Selic rate to 14.25% — a level last seen in 2016 — in a unanimous decision, meeting the expectations of all 37 economists polled by Reuters. "The Committee anticipates an adjustment of lower magnitude in the next meeting, if the scenario evolves as expected," policymakers wrote in a statement announcing their decision. More than the widely expected rate hike, markets were focused on the central bank's message about its next steps, now seen fully in the hands of its new governor, Gabriel Galipolo. Galipolo, a close ally of President Luiz Inacio Lula da Silva, took over in January from Roberto Campos Neto, who was a frequent target of criticism from the leftist leader. In the two monetary policy meetings held under his leadership so far, Galipolo has closely followed guidance set in December, with Campos Neto at the helm, which had penciled in 200 basis points of tightening in this year's first quarter. Attention has now centered on Galipolo's signals about bringing inflation back to target, as Lula grapples with low approval ratings and ramps up stimulus to spur consumption - at odds with the central bank's efforts to cool economic activity. The Brazilian central bank decision came on the same day the U.S. Federal Reserve held rates steady, assessing the new administration's policies before moving ahead with lower borrowing costs. Although Brazil's currency has gained more than 9% against the U.S. dollar so far this year, longer-term inflation expectations have continued to deteriorate, underscoring doubts about a sustained convergence toward the 3% official target. Brazil's economic activity, which policymakers have been closely tracking for signs of a slowdown, weakened more than expected last quarter. However, early data from this year still showed some resilience, as central bank officials noted in recent remarks. "The set of indicators on economic activity and labor market has been exhibiting strength, even though we observe signals that suggest an incipient moderation in growth," Copom said in its policy statement on Wednesday. Reflecting updated economic conditions, the central bank lowered its 2025 inflation forecast to 5.1%, from 5.2% projected in January. For the third quarter of 2026, the period most influenced by current monetary policy decisions, it now expects 12-month inflation of 3.9%, compared with a previous estimate of 4.0%.
Reuters
14-03-2025
- Business
- Reuters
Brazil central bank to hike rates to near decade-high on March 19: Reuters Poll
BUENOS AIRES, March 14 (Reuters) - Brazil's central bank will hike its benchmark interest rate to a near decade-high of 14.25% on March 19, giving little extra forward guidance amid a changing outlook, a Reuters poll showed. The bank's monetary policy committee, known as Copom, is widely expected to raise the Selic rate by 100 basis points, delivering the third consecutive increase of that size in the current tightening cycle. Under recently appointed governor Gabriel Galipolo, Banco Central do Brasil (BCB) has maintained a tough stance against resurgent inflation, in parallel to a battery of government measures to combat worrying trends. However, contrary to the latest adjustments the bank had clearly indicated, next week's policy statement will likely offer few hints of the path ahead, given increasingly mixed economic news. Copom will raise the Selic by one percentage point to 14.25% at its March 19 meeting, its highest since a similar 14.25% rate in September 2016, according to all 37 economists polled March 10-13. "The central bank will indicate a slower pace of adjustment at the following meeting (in May), without committing to subsequent moves," said Leonardo Costa, economist at Asa Investments. Recent data have pointed to an ongoing economic slowdown that should help bring inflation - which ran at 5.06% last month, the fastest in more than a year - down later this year. Meanwhile, U.S. President Donald Trump's erratic tariff policy continues to add uncertainty - not only on the monetary side, but also on the bilateral trade front, where Brazil's government is keeping its cool. Nearly all analysts who responded to an extra question on BCB's next move after this month's decision, 20 of 22, saw another increase in May, after Copom's April recess. The remaining two called for a cut at different months in the second half of 2025. Of the 20 expecting a May increase, 12 forecast a half-percentage point move, seven a 75 basis point hike, and one a 100 basis point increase. The Selic is forecast to peak at 15.25% in the third quarter, the highest since a similar 15.25% in June 2006. It is then forecast to start falling, ending 2025 at 15.00% and 2026 at 12.50%, according to median quarterly estimates in the poll. "Although we don't expect new guidance (on March 19), there should be some room for a possible future reduction in the pace of rate hikes," wrote Gabriel Barros, chief economist and Johann Soares, economist at ARX Investimentos.
