MNI BRIEF: Brazil's Copom Holds Selic Rate At 10.50%

MNI (BRASILIA) - The Central Bank of Brazil (BCB) decided unanimously to maintain the official Selic rate at 10.50% Wednesday for the second consecutive meeting after nearly a year of aggressive easing, citing higher inflation expectations and mounting upside risks to the inflation outlook. 

"The Committee unanimously decided to keep the interest rates unchanged, highlighting that the uncertain global scenario and the domestic scenario, marked by resilient economic activity, an increase in its own inflation projections and deanchored expectations, require diligent monitoring and even greater caution," said the statement. It added the board will remain "vigilant", a word usually used when the likelihood of a rate hike is greater than a cut. (See MNI: BCB Rate Hike Unlikely But Not Off The Table-Ex-Officials)

"In particular, the inflationary impacts of the movements of market variables and inflation expectations, if persistent, corroborate the need for more vigilance."

The decision was in line with market expectations. The unanimous decisions of the last two meetings contrast with the split vote for a 25-basis-point cut in May, when four members, all President Luiz Inácio Lula da Silva's nominees, called for a 50-basis-point reduction.