Stubborn inflation has prompted not one but two 100bps interest rate rises in the year so far, with the base rate now standing at its highest level since 2016 at 14.25%. The BCB is moving to align the Brazilian financial landscape with international standards with updated methodology and oversight requirements and proposals. Unemployment is currently rising, although formal job creation in February exceeded forecasts.
Monetary Policy, Inflation & Interest Rates
The Banco Central do Brasil (BCB) is maintaining an aggressive monetary tightening cycle in an effort to fight persistent rising inflation (5.06%, forecast to hit 5.2% for the year). In January the Monetary Policy Committee raised the SELIC rate by 100bp to 13.25%, and raised it a further 100bp to 14.25% in March, reaching its highest level since 2016. With current macroeconomic and geopolitical uncertainty forecasts for any further rate rises or cuts are currently mixed, however, should inflation reduce then rate cuts are f...
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