Brazil’s central bank kicked off its rate-cutting cycle more aggressively than expected on Wednesday, reducing its benchmark interest rate by 50 basis points and signaling more of the same in the months ahead due to an improving inflation outlook.
The bank’s rate-setting committee Copom cut its Selic policy rate to 13.25%, as just 10 of 46 economists surveyed by Reuters had anticipated. The rest expected a smaller reduction of 25 basis points.
Brazil’s first rate cut in three years came after policymakers held borrowing costs steady since September 2022, following 1,175 basis points of rate hikes to battle inflation, the world’s most aggressive monetary tightening at the time.
Reporting by Peter Frontini Additional reporting by Marcela Ayres and Carolina Pulice Editing by Brad Haynes and Diane Craft via Reuters