Monetary Policy Committee, or Copom, renewed on Tuesday September 12 the signaling that “a moderate reduction in the magnitude of flexibility at the next meeting seems adequate under the current perspective,” according to the minutes of the meeting held of the Central Bank.
“All committee members reemphasized that the approval and implementation of reforms, especially fiscal ones, and adjustments in the Brazilian economy, are fundamental for the sustainability of the environment with low and stable inflation, for the full functioning of the monetary policy [decisions on the basic interest rates] and for the reduction of the structural interest rate of the economy, with ample benefits for the society “, says the document.
The bank last week cut its benchmark the basic interest rates or Selic rate by 100 basis points from 9.25 percent to 8.25 percent, a four-year low. With inflation holding near 18-year lows, economists expect the central bank to reduce the Selic rate to a record low of 7 percent by December, a weekly central bank poll showed on Monday.
Central bank said in the minutes that only in exceptional cases might it be preferable to anticipate interest rate cuts. Next month’s monetary policy decision will be contingent on many factors, including data on economic activity and inflation forecasts, the bank added.