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05 Dec 2011

Brazil cuts rates for the 3rd straight time

New cut drives Selic to 11% p.a

The Central Bank of Brazil decided to lower its Selic rate by 50 basis points to 11% from 11.5%. The unanimous decision was widely expected by analysts and marks the third consecutive 50 basis points rate cut since the 12.5% maximum. The Monetary Policy Committee (Copom) has begun an expansive monetary policy cycle to lower the high rates relative to inflation readings. The latest inflations readings were close to 7%, above the top part of the target range (6.5%). The central bank's statement, which is almost identical to the previous rate decision, indicates that the "moderate" rate cuts could ease the impact of a deteriorating global economy without risking its 2012 inflation target.

During a protocol visit to Brazil, o the 1st of December, the President of the International Monetary Fund, Christine Lagarde highlighted Brazil's marcoeconomic stability. She recognized the country's effort in seeking solidity through fiscal responsability, inflation targeting and floating exchange rates.