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29 Nov 2012

The Selic rate stays at 7,25 % pa.

Central bank ends year by maintaining key interest rate

The central bank, Banco Central do Brasil (BCB), interest rate committee (COPOM) decided on 28 November to hold the interest rates steady at 7.25 % per annum.

The easing cycle has ended
It is the first time since the end of August 2011 the interest rate is not reduced. The decision to keep interest rates at 7.25% per annum, thereby, marks the end of a prolonged interest adjusment process, as the interest rate since late August 2011 has been lowered from 12.5% per annum to its current level, see also graph below.

A relatively stable level of inflation has seen BCB make a significant reduction in interest rates and in that way stimulate the economy. This also means that the real interest rate is now 1.71% per annum. - a historically low level.

The BCB stated after the meeting: "Considering the balance of risks for inflation, the recovery of domestic activity and the complexity surrounding the global environment, the committee understands that the stability of monetary conditions for a sufficiently prolonged period of time is the most adequate strategy to guarantee the convergence of inflation to target,..."

Selic interest rate, May.05 - Nov.12
Selic Rente November