Brazil’s central bank on Tuesday signaled that a worsening recession could force it to abandon plans to aggressively raise interest rates to battle inflation, which recently hit a 12-year high.
In an unusual statement hours before the start of a two-day monetary policy meeting, central bank chief Alexandre Tombini said policymakers will take into consideration the International Monetary Fund’s “significant” cuts to Brazil’s growth outlook for this year and 2017.
His comments considerably lowered market expectations for the bank to hike its benchmark Selic interest rate BRCBMP=ECI by 50 basis points to 14.75 percent on Wednesday, according to a Reuters poll of economists.
Twenty-four out of 43 economists continue to predict a 50-point hike, while the rest expect either a smaller increase or no increase at all. In a Reuters poll last week, 48 out of 59 economists expected a 50-point hike.
Brazil Energy Insight 
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