BRASILIA – Brazil’s central bank is likely to keep its fast pace of interest rate cuts in September after policymakers rejected the idea of signaling a more cautious move, according to the minutes released on Tuesday of its last policy meeting.
The bank’s nine-member monetary policy committee, known as Copom, cut its benchmark Selic rate by 100 basis points on July 26, to a near four-year low of 9.25 percent.
The minutes showed the policymakers considered flagging a smaller rate cut for their next meeting in September. But they opted instead to signal a rate cut of 100 bps.
Lower interest rates should help Brazil’s economy recover after its worst recession on record ended in the first quarter.
Annual inflation, which surpassed 10 percent less than two years ago, has plunged to just 2.78 percent, the lowest in 18 years and below the lower boundary of the official target range.
Copom said the September rate cut will remain conditioned on the economic outlook and on prospects for measures to reduce public spending and boost productivity.
Last week’s rate cut was the seventh since October in a cycle expected to take rates as low as 7.75 percent by the end of the year, according to a weekly central bank poll of economists on Monday.
The central bank said a recent fuel tax hike will not have significant consequences for monetary policy.
The minutes also said all Copom members agreed that the economy appears to have stabilized after its two-year-long recession but that the pace of recovery remains uncertain.
Reporting by Silvio Cascione; Editing by W Simon