The Brazilian Central Bank on Wednesday voted to hold its base interest rate steady at 6.5%. It was the second “hold” order in a row. The bank’s decision was unanimous. In an accompanying statement, the bank struck a note of caution by saying current economic conditions were “clouded” by a truck strike in May. The strike distorted trends for both inflation and growth. The bank also noted what it called “continued challenging conditions overseas.” Wednesday’s decision comes at a difficult time for Brazil, and for the Central Bank’s directors. Low inflation and stalled growth should encourage interest rate cuts. However, domestic political uncertainties and volatile international markets have led to pressure on the Brazilian Real, with some economists calling for the Central Bank to hike interest rates as a way to defend the currency.
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