Inflation subdued, Central Bank may give a hand to growth


    Bigger interest rate cuts are a probability as inflation is falling faster than expected, said Brazil Central Bank’s chairman  Ilan Goldfajn in an interview to Nikkei, the Japanese newsmedia. The benchmark rate had already been lowered in each of Copom meetings since last October, when it has been made the first rate cut in four years. The bank reduced the rate by 25 basis points in each of the first two cuts, followed by two drops of 75 basis points apiece. The rate now stands at 12.25%.

    Ahead of the next Copom meeting in April, the Brazilian monetary authorities are looking at factors like “inflation expectations and economic activity. We are open to making any decision,” said Goldfajn.

    Recent success in curbing inflation has given the central bank a freer hand to lower interest rates. Consumer prices rose 4.76% on the year in February, the slowest pace in six and a half years, down from rates of more than 10% between the end of 2015 and early 2016.

    The bank’s priority will shift from braking inflation to stimulating the economy, which shrank 3.6% in real terms in 2016, recording a second straight year of contraction

    Read Nikkei article