During its March gathering, Brazil’s central bank trimmed the main Selic rate (federal funds rate) by 0.50 percentage points, bringing it to 10.75%, which met market forecasts. Policymakers noted that the international climate remains unpredictable, with ongoing discussions over when major economies will begin loosening their monetary policies, as well as the rate at which worldwide inflation is decreasing.  

On the home front, economic performance metrics suggest a deceleration in line with what the Central Bank of Brazil’s Monetary Policy Committee (Copom) had projected. Despite a general downward trend in consumer price inflation, core inflation indices recently surpassed the set goal. Copom anticipates inflations of 3.5% for 2024 and 3.2% for 2025.  

The aim behind the rate cut is to steer inflation towards the target level and to provide stability for the economy. The Committee emphasized the significance of adhering to fiscal objectives to ground inflation expectations and mentioned the possibility of further rate reductions should the present conditions hold. This approach seeks to blend cautiousness with temperance in the conduct of monetary policy amid the backdrop of worldwide uncertainty. 

In March, the Brazilian real stabilized around 4.97 per U.S. dollar, as investors evaluated interest rate decisions made by the central banks of Brazil and the United States. On Monday, the Ibovespa, Brazil’s benchmark stock index, ended the trading session slightly lower at 126,848 points. Investors were anticipating the release of the minutes from the latest meeting of the Central Bank’s Monetary Policy Committee (Copom), as well as previews of the inflation and employment data for March. 

(USDBRL Six-month Chart) 

(Ibovespa Index Monthly Chart) 

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