Brazil Central Bank has cut down the country’s key interest rate. The Monetary Policy Committee (COPOM) decided to decrease the SELIC rate by one percentage point, cutting it from 11.25% per annum to 10.25% p.a., the lowest level since January 2014’s 10%. The move had been expected by financial analysts.
Hikes in regulated (e.g. utility rates) and food prices were among the main factors behind the high inflation levels until August, but inflationary pressure began to ease since then.
The SELIC rate is used by the government for trading public bonds and provides a benchmark for other interest rates used in the market. By cutting the rate, the Central Bank expects to make credit cheaper and boost production and consumption levels, buoying up the economy.