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Weekly Report - 28 January 2016 (WR-16-04)
BRAZIL: Markets despair at central bank move
A decision by the monetary policy committee (Copom) of Brazil’s central bank to keep the benchmark interest rate (Selic) stable at 14.25% has not gone down well. In fact, it was not so much the decision itself, but the manner by which the committee came to the decision that alarmed investors. Early in the week, most analysts believed that a 50 basis point rate rise was likely; when Copom decided to leave it unchanged, many analysts questioned the independence of the central bank. Its president, Alexandre Tombini, held a meeting with President Dilma Rousseff just two days before the decision. Writing for O Estado de São Paulo, the economist Fábio Alves criticised Tombini’s decision, arguing that it is “not enough to be independent, you must also appear to be independent.”
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