Lowering interest rates in Brazil will be moderate and gradual
It is suggesting it is unlikely to accelerate the pace of interest rate cuts in its November policy meeting.
In the minutes of its October 19 meeting, in which it cut its benchmark Selic rate by 25 basis points to 14%, the bank also said it was worried about a recent pause in the slowdown of services price rises.
Some economists have expected the bank to cut the Selic rate by 50 basis points per meeting as a two-year recession drives inflation back down to the official 4.5% target.
“The central bank still looks cautious about inflation expectations,” said Camila Abdelmalack, chief economist at CM Capital Markets in Sao Paulo, who revised her forecast for the November rate cut to 25 basis points from 50 previously.
“There will not be enough time until November to confirm a slowdown in services prices.” ■