BRASILIA (Reuters) - Brazil’s central bank said on Tuesday it preferred a gradual end to interest rate cuts in the coming months, instead of bringing the cuts forward, in order to facilitate communication and collect more data about the economy.
The minutes of the central bank’s Sept. 6 monetary policy meeting also showed policymakers believe inflation has undershot the government’s target, in large part because of lower food prices.
The bank last week cut its benchmark Selic rate by 100 basis points to 8.25 percent, a four-year low.
Lower interest rates have helped stimulate a gradual economic recovery following a two-year recession.
With inflation holding near 18-year lows, economists expect the central bank to reduce the Selic rate to a record low of 7 percent by December, a weekly central bank poll showed on Monday.
The central bank said in the minutes that only in exceptional cases might it be preferable to anticipate interest rate cuts. Next month’s monetary policy decision will be contingent on many factors, including data on economic activity and inflation forecasts, the bank added.
Reporting by Silvio Cascione; Editing by Bernadette Baum