(Adds analyst comment, Temer background)
By Alonso Soto and Silvio Cascione
BRASILIA, Sept 6 The Brazilian central bank said
on Tuesday that future interest rate cuts will not depend on any
single factor, signaling that policymakers are ready to ease
monetary policy as inflation expectations improve.
In the minutes of its last rate-setting meeting, the bank
said all of its members were satisfied with the progress of
disinflation, but remained cautious about high inflation
expectations for 2017.
Last week, the bank kept its benchmark Selic rate steady at
14.25 percent for the ninth straight time in a bid to lower
inflation that is near 9 percent. The central bank then listed
conditions for a rate cut, including the persistence of food
price shocks, uncertainty around fiscal adjustment measures and
a pick-up in disinflation.
By saying that none of those factors by themselves are
necessary to cut interest rates, the bank signaled it may well
cut rates soon despite inflation concerns, some analysts said.
"The minutes are more dovish than hawkish as it leaves open
the door for a rate cut depending on how those factors evolve,"
said Flavio Serrano, senior economist with Sao Paulo-based bank
The bank also removed previous references to a lack of room
to cut rates, as well as a mention to lower private inflation
expectations before any changes in policy.
Brazilian interest futures <0#2DIJ:> were mixed as traders
bet that an October rate cut remained on the table but could be
delayed if progress on fiscal austerity proves too slow.
Some analysts, however, interpreted the minutes as signaling
that the bank could wait a bit longer to cut interest rates if
some of the conditions are not met.
"It is not because some of these factors are materializing
that the bank will cut rates. The bank has to be certain that
inflation will converge to 4.5 percent before any cut," said
Alessandra Ribeiro, economist and partner with consultancy
Brazil's new president, Michel Temer, who was confirmed last
week after the impeachment of his predecessor, has vowed tough
economic reforms to rebalance the public accounts and help the
central bank slash some of the world's highest interest rates.
(Additional reporting by Bruno Federowski; Editing by Jeffrey