Another hike in the Selic rate, now at its highest since 2006. A slight drop in inflation. And a sharper-than-expected rise in unemployment. On trade, the government has imposed a range of protectionist tariffs to support domestic manufacturing, while concerns are mounting over the potential for Chinese goods to flood the market in the wake of US tariffs.
Monetary Policy, Inflation & Interest Rates
In March, the Central Bank of Brazil (BCB) raised the Selic rate to 14.25 percent, its highest since 2016. This month, it went further, lifting the rate to 14.75 percent, the highest since 2006, in a continued effort to curb persistent inflation. Even so, BCB guidance now suggests the tightening cycle is nearing its end, with smaller increases likely going forward. Inflation projections have ticked down slightly. April’s reading came in at 5.06 percent and the year-end forecast has been revised from 5.2 to 5.1 percent. That’s still well above the BCB’s 1.5 to 4.5 percent target range. Bu...
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