Economy & Business - October 2023

BRAZIL | Rate cuts continue. On 20 September, the monetary policy committee (Copom) in Brazil’s central bank (BCB) unanimously agreed to a 0.5 percentage point cut to the benchmark interest rate, the Selic. This brings interest rates to 12.75%, after a first cut in August. In a statement, Copom said its decision was influenced by positive signs, with domestic economic activity “show[ing] stronger resiliency than previously expected”, although the committee “continues to anticipate economic deceleration for the next quarters”. Regarding inflation, Copom stated that “as expected, 12-month headline inflation increased in the recent period” but “various measures of underlying inflation have recently fallen”. Inflation grew 0.23% in August, bringing the annual figure to 4.61%. Copom projects Brazil’s consumer price index to reach 5% by year’s end, above the BCB’s target range of 3.25% +/- 1.5. The monetary policy committee nonetheless indicated that further cuts to the Selic can be expected at its next two meetings.

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