2023-07-25 18:22:00
The Brazil’s annual inflation slowed to its lowest level in almost three years earlier this month, paving the way for the start of the interest rate cuts at the central bank’s monetary policy meeting next week.
Official data published on Tuesday showed that consumer prices rose 3.19% in the first half of July compared to the same period last year, lower than the 3.4% increase in mid-June and below the 3.24% median estimate of analysts surveyed by Bloomberg. Compared to the previous month, prices fell 0.07%.
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The central bank has made significant progress in its fight once morest price pressures since 2022, when the cost of living increase exceeded 12%. A year of slowdown has pushed annual inflation below the bank’s current target of 3.25%, and monetary authorities have signaled they will start cutting interest rates at their August meeting.
President Luiz Inácio Lula da Silva has criticized the monetary authority for keeping the Selic rate at a maximum of six years from the 13,75%describing it as an obstacle to economic growth.
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High borrowing costs have affected consumers and businesses, resulting in High credit card rates and an increase in delinquencies in households. While the economy was resilient at the start of the year, it contracted more than expected in May, according to central bank data released this month.
Progress on Lula’s main legislative proposals to shore up Brazil’s fiscal outlook and reform its tax code have also raised government hopes that rate cuts are imminent.
Translated by Paulina Munita.
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