Brazil cuts interest rate by a quarter-point

BRASILIA — Brazil’s central bank cut its key interest rate by a quarter point Wednesday to 10.5 percent, continuing an easing President Luiz Inacio Lula da Silva hopes will spur Latin America’s biggest economy.

The cut to the benchmark Selic rate was smaller than six successive half-point reductions that preceded it, said the bank, because of a “slower” rate of disinflation and a “challenging” outlook for the global economy.

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 stunts Brazil’s growth.

READ: Brazil’s Feb inflation tops estimates to highest monthly figure in a year

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

The bank had indicated it may soon end the easing cycle, warning of rising prices.

Brazil’s benchmark interest rate is among the world’s highest in real terms.

Annual inflation in Brazil fell to a nine-month low in March.