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Briefing

Brazil: Monetary Policy

Appears in: Latin America, Macroeconomy, Brazil, Monetary Policy and Inflation

Critical Issues

Background:

In common with many other industrial and emerging economies, Brazil moved quickly to counteract financial instability and declining growth by loosening monetary policy during 2008-09, bringing the "Selic" policy rate to below 9%—a historic low for high-inflation Brazil.  The fundamental tendency of the Brazilian economy is toward overheating, leading to high inflation. As a result, Brazil has historically maintained high interest rates, although the consensus among economists is that the "equilibrium rate" of interest has been declining as the economy has liberalized and the efficiency of the private sector has improved.

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