Brazilian central bank cuts basic interest rate to 11%

The Brazilian Central Bank announced Wednesday that the country's annual basic interest rate (Selic) has been cut from 11.5 to 11%.
It was the 3rd consecutive cut of the Selic rate this year after two previous cuts of 0.5% each. But before that, the committee had raised the rate by 1.75%, so the Selic rate still accumulates a 0.25% rise this year.

The bank's unanimous decision had been expected by the market. Most economists placed their bets on a 0.5% cut when consulted by the latest market survey.

According to the bank, a moderate rate adjustment is consistent with a downside of Brazil's inflation rate to meet its Y 2012 inflation target. It also helps mitigate the effects of a more restrictive Global scenario.

The Y 2012 inflation target, the same as that of Y 2011, is set at 4.5% with a tolerance of 2%.

The committee's Wednesday meeting was the last one this year, and the next meeting will be held in January.

Paul A. Ebeling, Jnr.

Paul A. Ebeling, Jnr

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.