The Brazilian Central Bank on Wednesday cut its base interest rate by a full percentage point to 10.25% from 11.25%. The decision by the bank’s Monetary Policy Committee was unanimous. It was the sixth reduction in a row and follows the path of downward inflation. Brazilian inflation ended 2016 at 6.3% and is now operating at an annual level of just 4.1%, with many economists expecting continued decline. Indeed, the fight against inflation has been so successful that many expected the Central Bank to order a more audacious interest rate reduction Wednesday, perhaps to 10.0% or even less. However, in its statement Wednesday, the bank pointed to “a greater degree of uncertainty than in the immediate past.” Uncertainties have arisen in recent weeks as corruption allegations inch closer to President Michel Temer, threatening him with impeachment. According to economists, the political climate is undermining both consumer and business confidence.
Link to Central Bank release