Brazil lowers interest rate 50 basis points to 13.25%, 1st cut in 3 years

Decision implies ‘smoothing economic fluctuations,’ ‘fostering full employment without compromising’ price stability, bank says

By Ovunc Kutlu

ANKARA (AA) - Brazil’s central bank lowered its interest rate by 50 basis points to 13.25% -- its first rate cut in three years.

"The global environment remains uncertain, with some disinflation at the margin, but in an environment with still high core inflation and resilience in the labor market of many countries," the bank said late Tuesday.

Banco Central Do Brasil last made a rate hike of 50 basis points last August, 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 said its rate cut decision implies "smoothing economic fluctuations" and "fostering full employment" without compromising its objective of ensuring price stability.

Brazil's annual consumer inflation rose 3.16% in June, slowing from the year-on-year gain of 3.94% in May and 4.18% in April.

Inflation is expected to average 4.9% in 2023 and 3.4% in 2024, according to the bank's monetary policy committee.

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