Brazil cuts interest rate 50 basis points to 12.25%

By Ovunc Kutlu

ISTANBUL (AA) - Brazil’s central bank lowered its interest rate by 50 basis points to 12.25% -- its third consecutive rate cut.

"The global environment is adverse, due to an increase in longer-term interest rates in the United States, the persistence of high core inflation in many countries, and new geopolitical tensions," the bank said in a statement late Wednesday.

"The central banks of major economies remain committed to bringing inflation back to its targets in an environment characterized by labor market pressures," it added.

Banco Central Do Brasil last made a rate hike of 50 basis points in August 2022, carrying the rate to 13.75%, the highest since early 2017, and significantly up from a record low of 2% in March 2021.

The central bank lowered its interest rate by 50 basis points to 13.25% in early August, its first rate cut in three years, which was followed by another rate cut of 50 points in September.

Brazil's annual consumer inflation came in at 5.19% in September, accelerating from the year-on-year gains of 4.61% in August and 3.99% in July.

Inflation is expected to average 4.7% in 2023 and 3.6% in 2024, according to the bank's monetary policy committee.