By Marcela Ayres
BRASILIA (Reuters) – Brazil’s central bank lowered its benchmark interest rate by 50 basis points on Wednesday for the fourth time in a row and signaled that it would keep cutting rates at that pace beyond its next meeting in January.
The bank’s rate-setting committee, known as Copom, unanimously lowered the Selic policy rate to 11.75%, in line with the forecast of all 41 economists polled by Reuters.
The widely expected rate cut followed easing inflation, which the central bank recognized in its policy statement.
“Headline consumer inflation, as expected, remains on a path of disinflation, and various measures of underlying inflation are closer to the inflation target in recent releases,” wrote policymakers.
In the 12 months through November, inflation slowed to 4.68%, falling within the range of 1.75% to 4.75% targeted by the central bank for the year, but above the 3.25% center of the target.
Still, Copom’s statement signaled a steady pace for rate cuts ahead, adding that board members “unanimously anticipate further reductions of the same magnitude in the next meetings.”
Central bank chief Roberto Campos Neto had previously indicated that policymakers saw no benefits in signaling future policy actions beyond their next meeting in January, for which they had already flagged another cut of 50 basis points.
In public remarks, he called for caution in analyzing variables such as perceptions of a more challenging global outlook and progress in Congress on measures to stabilize the country’s public finances.
President Luiz Inacio Lula da Silva’s government has stuck to a goal of erasing its primary deficit in next year’s budget bill, but several measures aimed at hitting that ambitious target still require approval from Congress.
Following the U.S. Federal Reserve’s decision on Wednesday to hold rates and signal lower borrowing costs next year, Copom said the global environment “remains volatile and is less adverse than in the previous meeting.”
(Reporting by Marcela Ayres; Editing by Brad Haynes)
