News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • Join @MBForex at 8:30 EST/12:30 GMT for your weekly scalping webinar. Register here: https://t.co/VGr4ZK3QZ9 https://t.co/Pd3SA45g6O
  • 🇮🇳 Balance of Trade Prel (JUL) Actual: $-11.23B Previous: $-9.37B https://www.dailyfx.com/economic-calendar#2021-08-02
  • Heads Up:🇧🇷 BCB Focus Market Readout due at 11:30 GMT (15min) https://www.dailyfx.com/economic-calendar#2021-08-02
  • 🇲🇽 Business Confidence (JUL) Actual: 51.8 Previous: 52 https://www.dailyfx.com/economic-calendar#2021-08-02
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 92.94%, while traders in France 40 are at opposite extremes with 76.41%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/7m67VhGS8I
  • Heads Up:🇲🇽 Business Confidence (JUL) due at 11:00 GMT (15min) Previous: 52.3 https://www.dailyfx.com/economic-calendar#2021-08-02
  • 🇪🇸 Consumer Confidence (JUL) Actual: 91.9 Previous: 97.5 https://www.dailyfx.com/economic-calendar#2021-08-02
  • Commodities Update: As of 10:00, these are your best and worst performers based on the London trading schedule: Silver: -0.07% Gold: -0.33% Oil - US Crude: -1.46% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/N6GCFnvPQP
  • Forex Update: As of 10:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 0.19% 🇪🇺EUR: 0.19% 🇯🇵JPY: 0.09% 🇨🇦CAD: 0.07% 🇬🇧GBP: 0.04% 🇨🇭CHF: 0.00% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/0IJ0FZgbtF
  • Heads Up:🇪🇸 Consumer Confidence (JUL) due at 10:30 GMT (15min) Previous: 97.5 https://www.dailyfx.com/economic-calendar#2021-08-02
Brazil Central Bank Cuts Rates by 75 Basis Points

Brazil Central Bank Cuts Rates by 75 Basis Points

Daniel Dubrovsky, Strategist

Talking Points:

  • The Selic rate was cut by 75 basis points to 13.00% from 13.75%, versus 50bp expected
  • Brazil’s central bank released January’s monetary policy statement
  • Inflation expectations are set at 4.0% and 3.4% in 2017, 2018 respectfully

Would you like to know more about trading currencies or commodities? Check out our DailyFX webinars.

To start off the new year, Brazil’s central bank (BCB) unanimously decided to reduce its main lending rate – the Selic rate – by 75 basis points from 13.75 percent to 13.00 percent. The cut was steeper than the 50 basis points expected. This brings interest rates to their lowest level since March 2015. In addition, the last time the Banco do Brasil reduced rates by 75 basis points was back in March 2012, almost 5 years ago.

According to committee members, the BCB’s action was in-part supported by recent inflation readingssettling more quicklythan expected. The central bank also noted that there are signs of more widespread disinflation which justified a bigger cut. At the end of 2016, inflation ended at 6.3% which was well below expectations. Going forward, Brazil’s central bank forecasted inflation to be around 4.0 percent in 2017 and then 3.4 percent in 2018.

Aside from CPI expectations, slower-than-expected economic activity also helped justify a bigger interest rate cut. While members noted that the recent approval of fiscal reforms by congress have been positive, there are risks to the outlook for growth. These doubts include a highly uncertain global economic outlook, the process of disinflation being sensitive to the business cycle and the process of approval and implementation of reforms taking time and carrying uncertainty.

Thus members concluded that the current scenario made it appropriate to frontload the monetary easing cycle and allow the new pace of easing. Going forward, the committee said that the extension of the easing cycle and possible revisions to it will continue to depend on inflation forecasts.

The policy announcement was released outside of active trading hours for the Brazilian Real exchange rate. However, the MSCI Brazil Capped Exchange Traded Funds (ETFs), an index composed of Brazilian equities, rallied as much as 1.6 percent as the interest rate decision crossed the wires.

Brazil Central Bank Cuts Rates by 75 Basis Points

Chart compiled in Tradingview

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES