By Jeffrey T. Lewis and Samantha Pearson
SÃO PAULO–Brazil’s central bank left its benchmark lending rate unchanged Wednesday and reiterated it would leave the rate at a high level until inflation slows further.
The bank’s monetary policy committee, or Copom, left the Selic rate at a six-year high of 13.75%. The bank began raising the rate in early 2021 from a record low of 2% to slow the pace of consumer price increases. Brazil’s main measure of inflation has since come down from an almost 19-year high of 12.13% in April to 5.60% in February.
The central bank warned about financial-sector turmoil in the U.S. and Europe, saying the global environment has deteriorated, increasing uncertainty and volatility in markets. Policymakers also said uncertainty regarding its domestic economic projections is higher than normal.
“Taking into account the uncertainty of the scenarios, the committee remains vigilant, assessing if the strategy of maintaining the Selic rate for a long period will be enough to ensure the convergence of inflation,” the central bank said in its statement. “The committee emphasizes that it will persist until the disinflationary process consolidates and inflation expectations anchor around its targets.”
Even with prices rising less quickly, the central bank still can’t relax, said Flavio Serrano, an economist at BlueLine Asset Management.
“We have to recognize that inflation has improved. There’s less pressure now on prices for industrial products” and on some food prices, Mr. Serrano said. “But despite this improvement, inflation is still high.”
Write to Jeffrey T. Lewis at [email protected]
(END) Dow Jones Newswires
03-22-23 1805ET
