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Rescue economy! Brazil's central bank cut interest rates by 100 basis points hit the biggest decline in eight years

sourceBusiness News

publisherJennifer

time2017/04/14

Rescue economy! Brazil's central bank cut interest rates by 100 basis points hit the biggest decline in eight years
Brazil's central bank on Wednesday (April 12th) to lower interest rates, the largest decline for nearly eight years, according to the country's central bank or will hold a massive easing, to help the economy out of recession, the most difficult in the history of Brazil.
The central bank cut interest rates approved
The central bank nine members of the monetary policy committee unanimously agreed to cut interest rates, the index Selic interest rate cut by 100 basis points to 11.25%, the lowest level in the past two years. The rate cut is also the largest since June 2009. Brazil's central bank has cut interest rates in the last four meetings.
Brazil President Temel tweets praised the central bank to cut interest rates, but his 1/3 cabinet officials were involved in a new wave of corruption investigation, or frustration will make Temel austerity reform, central bank cut interest rates further space may be reduced. Political and business leaders have called on the central bank to be more relaxed, but the Committee has hinted that it will temporarily keep the current rate cut.
The central bank said in a statement in the resolution, the commission that the current pace of easing is appropriate; however, in the current economy, it is necessary to pay close attention to the trend of the light cycle decided after factors. However, some analysts believe that if inflation continues to slow, and the economy is still weak, the Central Bank of Brazil may have to choose a larger rate cut in the future.
Goldman Sachs analyst Alberto Ramos said that Brazil's central bank means that the current pace is appropriate, but they want to accelerate the pace of interest rate cuts to hold the door half open attitude, he also said he is expected to cut interest rates two times, each time by 100 basis points. Brazil's central bank in the quarterly inflation report, the market in 2017 will be adjusted for inflation forecast from 4% to 4.1%, but to maintain the valuation of unchanged at $4.5% in 2018.
After two years of recession, Brazil's economic recovery is weak, inflation is slowing, President Temel's reform to achieve the government's balance of payments, the pressure to re attract investors.
The president's ability to question
Temel cabinet has eight ministers this Tuesday (April 11th) by the investigation, people questioned the ability of temer approved a has milepost sense of pension reform, the related process may affect the pace of future rate cuts.
Brazil's central bank for the first time stressed that the approval of the reform related to the risk of inflation, suggesting that the pension proposal is not approved, will limit the size of the bank's loose cycle.
Brazil's economy shrank by nearly 8% in two years, driving consumer inflation to double digits in 2016 to 4.5%, in the middle of the official target. Inflation expectations also slowed sharply, prompting Mr. Temel to believe that the target of reducing inflation in 2019 to boost the credibility of the government. Lower inflation allowed Gold Fein, President of Brazil's central bank, to focus on economic growth. Economists predict that Brazil index interest rate will fall to 8.50% by the end of the year.