Brazil central bank keeps key rate at 6.5pc, cautious under Bolsonaro

Brazil’s central bank Wednesday kept its key rate steady at a historically low 6.5 per cent, showing caution as President Jair Bolsonaro’s government readied structural reforms meant to boost the economy. The decision adopted unanimously by the bank’s Monetary Policy Committee aligned with forecasts by most analysts. In a statement, the committee said that it has seen a “reduction of inflationary risks” since its last meeting in December.

But it said international context remained “challenging” and that obstacles to the anticipated reforms could “elevate the inflationary trajectory.” It said it intended to act with “prudence, serenity and perseverance” with the aim of keeping inflation within its target range. The central bank has kept is key Selic rate unchanged at 6.5pc since March 2018.

Economic growth last year was estimated to have been 1.3pc. Inflation was 3.75pc The market projected inflation this year reaching 3.94pc. Wednesday’s meeting was the last for outgoing central bank chief Ilan Goldfajn. The next, on March 20, is to be under his successor named by Bolsonaro, Roberto Campos Neto, who is yet to be confirmed by the Brazilian Senate.