No rate cuts seen in Brazil despite recession, analysts say

David Biller – Bloomberg, 12/7/2015

Brazil won’t have room to cut interest rates next year as inflation remains above the upper limit of the target in spite of a deepening back-to-back recession, according to a central bank survey.

Policy makers will keep the benchmark interest rate on hold at 14.25 percent next year, compared to a forecast of 14.13 percent a week earlier, the median estimate of about 100 economists in a Dec. 4 central bank survey shows. The survey followed indications by policy makers last week that the central bank is ready to boost borrowing costs next year.

“This is the reflection of the minutes that were released last week, which were much more hawkish than the previous minutes,” Edward Glossop, emerging market economist at Capital Economics in London, said by phone. “Policy makers are saying they’ll do what they need to do to get inflation as close to target next year as possible.”

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