LatinNews Daily - 04 May 2023

In brief: Brazil’s interest rate maintained

* Brazil’s central bank (BCB) has voted to maintain the benchmark interest rate at 13.75% for the sixth consecutive month. In its announcement, the BCB insisted that it would be maintained until the deflationary process “consolidates”, and that the bank would not hesitate to resume the cycle of tight monetary policy “if the disinflationary process does not proceed as expected.” The BCB had already raised its inflation forecast for 2023, predicting annual inflation of 5.8%, up from the December forecast of 5.0% and above the BCB’s inflation target of 3.25% +/-1.5. The statement did make a positive comment about the government’s proposed fiscal discipline framework currently being reviewed by congress, which has “partly reduced the uncertainty arising from fiscal policy”, although the BCB added that “there is no mechanical relationship between the convergence of inflation and the approval of the fiscal framework.”

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