Brazil's Central Bank Signals Rate Cuts Amid Cooling Economy

Brazil's central bank has signaled potential interest rate cuts at its March meeting, following a unanimous decision to keep the Selic rate at 15%. This move comes as Brazil aims to bring inflation back to target levels. Economists remain divided on the extent of the rate cut.

Brazil's central bank has indicated it may initiate interest rate cuts at its March meeting, emphasizing a careful approach to maintain restrictive monetary policy in order to rein in inflation. The rate-setting committee, Copom, voted unanimously to keep the benchmark Selic rate at 15%, meeting economist expectations.

The policy statement confirmed market anticipation of March rate reductions, though policymakers highlighted 'serenity' regarding the pace of the easing cycle. There's a split among economists regarding the magnitude, fluctuating between 25 and 50 basis points.

The central bank's decision coincided with the U.S. Federal Reserve's unchanged rates and follows a year of bringing Brazilian inflation below 4.50%, aided by a strong currency. This cautious strategy persists amid signs of a cooling economy, with inflation rates showing improvement but still above target.

(With inputs from agencies.)