Brazil to maintain current rate cut pace, cenbank board members say

BY Reuters | ECONOMIC | 12/01/23 11:18 AM EST

SAO PAULO, Dec 1 (Reuters) - Brazil's central bank still sees its current pace of 50-basis-point interest rate cuts per meeting as appropriate and expects it to remain in place for the next few meetings, multiple board members said on Friday.

Remarks from Governor Roberto Campos Neto and economic policy director Diogo Guillen came as the central bank's monetary policy committee prepares to gather for the final time this year on Dec. 12 to 13.

The authority has delivered a total 150 basis points of cuts since August, when it kicked off a monetary easing cycle after holding its benchmark rate at a six-year high of 13.75% for nearly a year to tame high inflation.

"We understand that the 50-basis-point pace is adequate ... and appropriate for the coming meetings," Campos Neto told an event hosted by bank federation Febraban, echoing Guillen's remarks at a Barclays event earlier in the day.

Guillen emphasized that there was a "high bar" for the easing pace to change.

Both declined to provide forward guidance on the end of the current easing cycle, but Campos Neto said the central bank believes the terminal rate would still be in restrictive territory. (Reporting by Gabriel Araujo, Luana Maria Benedito and Fabricio de Castro; Editing by Steven Grattan)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

fir_news_article