MNI BRIEF: BCB Hikes Rate By 100BP, Lower Pace For May Meeting
MNI (BRASILIA) - The Central Bank of Brazil (BCB) unanimously decided to hike its official Selic rate by 100 basis points again to 14.25% Wednesday, as widely expected, while signaling an adjustment "of lower magnitude" next meeting.
The move left official borrowing costs at their highest level since August 2016.
"In light of the continuation of the adverse scenario for inflation convergence, the heightened uncertainty and the lags inherent to the ongoing monetary tightening cycle, the Committee anticipates an adjustment of lower magnitude in the next meeting, if the scenario evolves as expected," the statement said.
The board's January decision, when the Monetary Policy Committee (Copom) hiked rates by 100bp to 13.25%, had guided one more increase of the same size at March meeting.
"Beyond the next meeting, the Committee reinforces that the total magnitude of the tightening cycle will be determined by the firm commitment of reaching the inflation target and will depend on the inflation dynamics," the statement added.
This marks the fifth consecutive rate hike amid a worsening inflation outlook driven by fiscal risks and external uncertainty. (See MNI INTERVIEW: BCB To End Hiking Cycle At 14.75% - Kfoury)