{"id":36678,"date":"2013-03-07T02:50:28","date_gmt":"2013-03-07T07:50:28","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=36678"},"modified":"2013-03-07T02:50:28","modified_gmt":"2013-03-07T07:50:28","slug":"brazil-holds-drops-guidance-of-stable-rates-for-long-period","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/03\/07\/brazil-holds-drops-guidance-of-stable-rates-for-long-period\/","title":{"rendered":"Brazil holds, drops guidance of stable rates for long period"},"content":{"rendered":"

By www.CentralBankNews.info<\/u><\/a>     Brazil’s central bank held its benchmark Selic rate steady at 7.25 percent, as expected, and said it would “monitor the microeconomic scenario until its next meeting to then define the next steps in its monetary policy strategy,” omitting the previous guidance that stable monetary conditions for a prolonged period was appropriate.
    Banco Central do Brasil also said in its very brief statement that the decision to hold the rate steady was without any bias and all members of the Copom committee had voted in favor of the decision.
    In November the central bank froze rates for the first time after 10 consecutive cuts and introduced the statement that keeping rates steady for a “prolonged period” was the most appropriate strategy to ensure that inflation would return to the bank’s target.
    This guidance was repeated at the bank’s previous meeting in January, but inflation has continued to accelerate and economic growth is improving, fueling expectations that rates may soon be raised.
    Brazil’s inflation rate picked up to 6.15 percent in January from December’s 5.84 percent, the seventh month in a row with rising prices. The central bank targets annual inflation of 4.5 percent, plus\/minus 2 percentage points.<\/span> <\/span>
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    Brazil’s <\/span>Gross Domestic Product rose by 0.6 percent in the fourth quarter from the third for annual growth of 1.4 percent, up from 0.9 percent in the third quarter.
    The central bank started cutting interest rates in August 2011 when economic growth began slowing, and slashed rates by a total of 525 basis points between then and November 2012.<\/p>\n

    www.CentralBankNews.info<\/a>
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Brazil’s economy grew 1.35% in 2012, says central bank<\/h1>\n
Source: XINHUA<\/span>  |   2013-2-21  |     ONLINE EDITION<\/div>\n
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BRASILIA, Feb. 20 (Xinhua) — Brazil’s economy grew 1.35 percent in 2012, well above the market forecast of 1 percent, estimated the country’s central bank Wednesday.

The official figure will be released by the Brazilian Institute of Geography and Statistics (IBGE) on March 1.

While the central bank’s growth estimate is higher than the market prediction, it still falls short of the government’s 4 percent growth projection announced at the beginning of last year.

The country’s economic activity in December rose 0.26 percent compared with the previous month, lower than November’s 0.57 percent compared with October, indicating an economic slowdown towards the end of last year, according to the bank.

In 2012, the Brazilian government announced a series of measures to stimulate growth, including cutting the central bank’s overnight rate to a record-low 7.25 percent, reducing taxes for industries, increasing credits and lowering prices.

For 2013, the government forecasts a 4 percent gr<\/div>\n<\/div>\n

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Brazil’s Tombini: Interest Rate Will Be Adjusted as Needed<\/h1>\n
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By Dow Jones Business News, <\/span> February 19, 2013, 10:02:00 AM EDT<\/span><\/div>\n<\/div>\n
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BRASILIA–Brazil’s central bank plans to maintain firm control of inflation and will adjust its interest-rate policy as necessary to do so, central bank president Alexandre Tombini said Tuesday.<\/div>\n
Speaking at the unveiling of an administrative cost-cutting program, Mr. Tombini said that the bank remained poised to act on rising prices and that there was no risk<\/span><\/span><\/a> of uncontrolled inflation in Brazil’s economy.<\/div>\n
“When necessary as determined by the outlook for inflation, the posture of the central bank in relation to monetary policy will be adjusted adequately,” he said.<\/div>\n
Mr. Tombini, however, also said that he believed interest rates would tend to vary “within a lower range than in the past.”<\/div>\n
Some analysts have speculated that the central bank could act to raise its base Selic interest rate as early as the second quarter of this year after the IPCA consumer-price index topped 6% in the 12 months through January. The inflation rate remains well above the 4.5% centerpoint of the country’s inflation target range.<\/div>\n
The Selic rate currently stands at a record low of 7.25%.<\/div>\n
Mr. Tombini’s comments Tuesday come after Brazilian Finance<\/span><\/span><\/a> Minister Guido Mantega at a meeting of Group of 20 officials late last week said that the country planned to rely on monetary-policy measures rather than foreign-exchange policy measures to maintain inflation under control.<\/div>\n<\/div>\n

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Brazil Anticipates Higher Interest Rates To Control Inflation<\/h1>\n
BRASILIA, Feb 18 (BERNAMA-NNN- MERCOPRESS) – Brazil’s Finance minister Guido Mantega in Moscow for the G-20 meeting, said that inflation above the government’s target raises a yellow flag and that monetary policy, not the exchange rate, is the right tool to control prices.<\/p>\n

“The interest rate isn’t fixed. If you have more worrying inflation, it can move, but this is up to the central bank to decide,” Mantega said in an interview from Moscow. “The government will do what it takes to keep inflation under control.” Inflation which has exceeded the 4.5% target in the past 29 months, quickened to 6.15% in January.<\/p>\n

Mantega said the government will not allow the currency to over-appreciate in a bid to rein in consumer prices after the currency strengthened to a nine-month high last week. A stronger currency helps tame inflation by making imports cheaper.<\/p>\n

Traders see a 50% chance of policy makers raising the Selic rate to 7.5% from 7.25% in April, Diego Donadio, Latin America strategist at Banco BNP Paribas Brasil SA, said in a telephone interview.<\/p>\n

Brazil’s real appreciated 0.4% to 1.9582 per dollar last week, the strongest level since May 10, on speculation the government would allow the currency to appreciate to contain inflation. A drop in U.S. jobless claims also fostered demand for emerging-market assets.<\/p>\n

“We will not allow for an over-appreciation of the Real,” Mantega said, adding that the government isn’t thinking of a specific level. “We won’t tolerate abnormal fluctuations”.<\/p>\n

Speculation that Brazil was changing policy and seeking a stronger currency to help tame inflation started last month after the central bank surprised the markets with an intervention in swaps to prop up the Real.<\/p>\n

The Real rallied to a level stronger than 2 per dollar on Jan. 28 for the first time since July after the central bank renewed US$1.85 billion of currency swaps about to expire, refraining from buying dollars to settle the contracts.<\/p>\n

On Jan. 31, the government exempted foreigners from a tax on real-estate funds traded on the stock exchange, spurring speculation that inflows will help sustain the real.<\/p>\n

The Brazilian central bank swung in 2012 between selling currency swaps to prevent the Real from falling too quickly and offering reverse currency swaps to protect exporters by keeping the Real from strengthening beyond US$2.<\/p>\n

The central bank Monetary Policy Committee, Copom next meeting is scheduled for March 5\/6.<\/p><\/div>\n

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WRAPUP-Brazil’s central bank points to new FX trading band<\/h1>\n
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