The Brazilian Central Bank on Wednesday slashed its base interest rate by 100 basis points to 11.25 percent. The move was widely expected by financial market analysts. The cut was bolder than past reductions. Earlier this year, the bank cut the base rate by 75 basis points. Reductions last year were made in modest 25-point steps. While ordering the latest cut, the Central Bank noted that the outlook for Brazilian inflation has turned favorable. Inflation has fallen sharply from 6.3 percent at the end of 2016 to 4.6 percent now. Inflation is expected to continue falling and could end the year as low as 4.0 percent, according to many economists. The official inflation goal for 2017 is 4.5 percent. Meanwhile, Brazil’s economic recovery continues painfully slow, a fact acknowledged by the Central Bank in its statement Wednesday. Rate cuts are expected to spur consumption and investment, giving more pep to the recovery.
Link to Central Bank release
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