Brazil Central Bank Keeps Key Rate at 14.25%
Brazil's central bank on Wednesday opted to hold its benchmark interest rate at 14.25 percent for a sixth consecutive time, amid stubbornly high inflation and political uncertainty.
The bank, which makes rate decisions eight times a year, has held its key Selic rate steady since the last of seven consecutive hikes in July 2015.
Despite the flailing economy -- with a 3.8 percent shrink in GDP last year due to persist through 2016, according to the IMF -- the market consensus had been that the interest rate would not change.
The main reason? Inflation, which hit 10.67 percent in 2015.
Price rises are forecast by the central bank to ease to 6.6 percent this year, then 4.9 percent in 2017 and 4.5 percent in the first trimester of 2018.
Latin America's biggest economy has been in recession since the second quarter of 2015. The three main credit rating agencies have lowered their Brazil rating to junk status.
The economic downturn has dovetailed with a political crisis in which economic reforms announced by President Dilma Rousseff have languished amid paralysis in Congress.
Now Rousseff is fighting impeachment on charges that she illegally manipulated government accounts.
She could be suspended as early as mid-May while the impeachment trial gets underway. She would be replaced by her bitter political opponent, Vice President Michel Temer.
The unemployment rate rose sharply from the 7.6 percent registered in January.
The Brazilian economy shrank by 3.8 percent last year, its worst recession in 25 years. The government estimates it will shrink by 3.05 percent this year, while the markets are betting on a contraction of 3.6 percent.
Source: Agence France Presse
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