Brazil left its benchmark interest rate unchanged on Wednesday. In a unanimous decision, the central bank’s monetary policy committee, Copom, kept the Selic rate at 11%, breaking a streak of nine consecutive hikes as expected by a majority of analysts and market traders.
Worries that higher rates could hurt an already fragile economy and a slowdown in the pace of price increases has led the central bank to change tactics even though inflation remains close to the 6.5% ceiling of the official target.
In its decision statement, the central bank said it decided to leave the rate unchanged “at this moment,” signaling it has not closed the door on more rate hikes in the future.
“Evaluating the evolution of the macroeconomic outlook and perspectives for inflation, the Copom decided, unanimously, at this moment, to maintain the Selic rate at 11.00 percent per annum, without bias,” the bank said in a statement.
However many economists believe the bank needs to continue tightening to anchor high inflation expectations even if it meant more pain to an already tepid economy, with anemic growth in the last three years, and not better prospects despite presidential elections next October.
Double-digit interest rates along with sagging business confidence and a still subdued global economy has dragged down activity in Brazil, once one of the world’s fastest-growing economies.