By Isabel Teles
SAO PAULO, April 29 (Reuters) – Brazil’s central bank cut interest rates by 25 basis points on Wednesday for a second straight meeting without introducing forward guidance, conditioning its next moves on new information about the economic effects of the U.S.-Israel war against Iran.
The central bank’s rate-setting committee, called Copom, voted unanimously to lower its benchmark Selic rate to 14.50%, in line with the expectations of 31 out of 35 economists surveyed by Reuters.
Policymakers, who started the easing cycle with an initial 25-basis-point cut in March, reiterated the need for serenity and caution in the conduct of monetary policy.
“Future steps of interest rate calibration can incorporate new information about the depth and duration of the conflicts in the Middle East,” they wrote in their policy decision.
Brazil’s central bankers have said they had margin to start easing because of what had been an extremely restrictive policy stance. In their drive to bring inflation to the 3% target, with a tolerance margin of plus or minus 1.5 percentage points, the central bank had held the Selic rate at a nearly 20‑year high since last July, among the world’s highest real interest rates.
Since their March meeting, the Brazilian real has strengthened, partly supported by the wide interest rate differential with advanced economies, helping to curb inflation pressures by making imports cheaper.
(Reporting by Isabel TelesEditing by Brad Haynes)
