Brazil cuts interest rate by a further half-point

Brazil's central bank cut its key interest rate by half a point for the sixth straight time on Wednesday, continuing the easing that President Luiz Inacio Lula da Silva hopes will spur Latin America's biggest economy.

In line with analyst forecasts, the bank's monetary policy committee said its members had voted unanimously to lower the benchmark Selic rate to 10.75 percent in their second meeting of the year, reports BSS/AFP.

The committee's members plan to make reductions "of the same magnitude in their coming meetings," they said in a statement, with a next gathering expected in May.

Haunted by a history of hyperinflation, Brazil had gone on one of the most aggressive monetary tightening cycles in the world when the Covid-19 pandemic and then Russia's invasion of Ukraine sent global prices on an upward spiral in early 2021.

Veteran leftist Lula has pushed hard for interest rate cuts, saying a high Selic is "irrational" and stunting Brazil's growth.

The bank's monetary policy committee initiated its cycle of gradual reductions in August, but Lula believes movement should be more pronounced.

"There is no economic explanation for maintaining such a high rate," he said Monday during an interview with television channel SBT.

The committee however, maintains that caution is necessary, particularly as "uncertainties" grow over both Brazilian and international inflation.

"The monetary authority must act prudently and conservatively," Gabriel Galipolo, director of monetary policy at the central bank, said last month.

Annual inflation in Brazil remained virtually unchanged in February at 4.50 percent, official data showed earlier this month.

That figure places annual inflation at the upper end of the Brazilian central bank's 2-4.5 percent target range.

The Brazilian bank's decision came the same day the US Federal Reserve voted to hold interest rates at a 23-year high for a fifth consecutive meeting.