Brazil’s Central Bank Cut the Interest Rate to a New Record Low

Brazil’s Central Bank cut the monetary policy interest rate (the Selic rate) by 0.75pp to 3%, a new record low. The Monetary Policy Committee (Copom) stated that the current scenario requires more monetary stimulus, as the COVID-19 impact on the economy seems to be more severe than forecast on the previous meeting. Further, inflation is below the target range. 

That was the seventh cut during the past ten months, and the second since COVID-19 started to spread in Brazil, which prompted many local governments to impose quarantine measures as of mid-March 2020, with had negative impact on the economic activity.

The committee pointed out that there are limits for the continuation of monetary adjustments, conditioned on fiscal sustainability. However, for the next meeting, the committee considers one last cut to tackle the economic consequences of the pandemic.
 

Detailed data and analysis on COVID-19 and its economic impact can be found on the CEIC COVID-19 Outbreak and Impact Monitor.