The Central Bank of Brazil cut its benchmark interest rate Selic for a third-straight time to a record low of 10.25%.
Monetary policy makers voted unanimously to lower the rate to 10.25% from 11.25%. The move follows cuts of 150 basis points last month and 100 basis points in January. A basis point equals 0.01 percentage point.
"Assessing the macroeconomic scenario and with a view to extend the process of monetary easing, the Copom unanimously decided to lower the Selic rate to 10.25 percent, without bias," policy makers said in their statement without any further elaboration.
"Today's cut, despite being smaller than the past one, reflects the central bank's aggressive monetary policy and is consistent with the economic disruption" said Roberto Padovani, chief economist at Banco WestLB in Sao Paulo.
Slower inflation will allow policy makers to keep cutting the Selic rate at their June meeting, economists say. The benchmark interest rate will drop to 9.25% by year-end, according to the median estimate in April 24th Central Bank survey of about 100 economists.
Brazil's broadest measure of inflation, the so-called IGP-M price index, fell 0.15% this month, the Getúlio Vargas Foundation said Wednesday. The index, which measures consumer, construction and wholesale prices, has dropped in three of the first four months of 2009.
The Central Bank targets inflation of 4.5% with a leeway of plus or minus two percentage points.
Mercopress - 05 May 2009
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