Brazil set to test lower bound on rates, despite misgivings

(Reuters) – Brazil’s central bank will likely be forced to put aside its misgivings and cut interest rates much further, testing the “lower bound” of rates as it battles against potentially the biggest economic crash on record and historically low inflation.

A debate over the lower bound, which has consumed various global central banks in recent years, is now raging in Latin America’s biggest economy as its rates are pushed to their lowest ever: At what amorphous point do rate cuts turn counterproductive and raise concern over inflation or financial stability?

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