Brazil’s Central Bank: Issued a temporary policy interest rate unchanged


■ The real GDP fell 0.2% month-over-month in the quarter from October to December last year, the first negative growth since the quarter from April to June 2021
■ The growth rate of inflation will continue to slow down, and the central bank of Brazil will probably maintain the policy interest rate at 13.75%

    The Brazilian Institute of Geography and Statistics announced on the 2nd that the real GDP fell 0.2% month-over-month in the quarter from October to December last year, and slowed down after peaking in the quarter from January to March (a year-over-year increase of 1.3%). It is expected that there will be negative growth in April 2021. This is the first time since June (down 0.3% year-over-year). Personal consumption, accounting for 60% of GDP, maintained growth, but the decline in capital investment posed downward pressure on growth. On the same day, President Lula announced that he would expand the cash payment policy for low-income people. Finance Minister Haddad said that he did not expect an economic recession, but pointed out that maintaining interest rates at the current level would lead to economic slowdown. President Lula has put pressure on the Central Bank of Brazil (BCB) to cut interest rates, but the President of the Central Bank of Brazil, Campos Neto, believes that a more independent central bank will make monetary policy more efficient.
    After the Monetary Policy Committee (COPOM) raised the policy interest rate to 13.75% in August last year, it remained unchanged for four consecutive meetings. The year-over-year growth of consumer price index (IPCA) in January slowed to 5.77% after reaching a peak of 12.1% in April last year. According to the market forecast, 5.55% in February 2020 is expected to exceed the central bank's target (3.25 ± 1.5% in 2023). In the COPOM statement in February, BCB predicted that the future inflation rate in 2023 and 2024 would be 5.6% and 3.4%, close to the central bank's target (2024-2025: 3.0 ± 1.5%). In February, the comprehensive PMI was 49.7, falling below 50, falling into recession for the fourth consecutive month.