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Brazil Hikes Rate by 25 Points Slowing Its Tightening Policy

Brazil slowed the pace of monetary tightening on Wednesday, signaling it may be near the end of a rate-hiking cycle that threatened to tip Latin America’s largest economy into a recession.

The central bank’s monetary policy committee voted unanimously to hike its Selic rate by 25 basis points, breaking a streak of six straight 50-basis-point hikes that took the benchmark rate to its highest level in over two years.

The bank kept its post-decision statement almost unchanged from the previous one, only removing a phrase added at its last meeting that said the decision had been taken “at this moment.”

While the bank did not close the door to raising rates again at its next meeting in April, many economists saw the decision as a signal that it may soon end one of the world’s most aggressive monetary tightening cycles.

“The central bank is signaling that it is ready to end the cycle,” said Andre Perfeito, chief economist at Gradual Investimentos in Sao Paulo. “The bank is being more cautious due to a sense that economic activity can slow down a lot in 2014.”

via CNBC [1]

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Alfonso Esparza

Alfonso Esparza [6]

Senior Currency Analyst at Market Pulse [7]
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza