Brazil’s central bank cuts benchmark lending rate by 50 basis points to 4.50%

Early Thursday morning in Asia, Brazilian central bank Banco Central do Brasil announced 50 basis points (bps) cut to its benchmark rate of 4.50% now. This marks a fourth consecutive rate cut from the central bank.

Key quotes (via Financial Times)

The Selic rate was slashed to a record low of 4.5 percent on Wednesday after the monetary policy committee, known as ‘Copom’, approved a cut of 50 basis points.

The move came just a week after the Brazilian real plunged to record lows against the US dollar–a drop that some analysts attributed in part to declining interest rates.

Looking into 2020, policymakers are betting on a series of big economic reforms, following on the passing of a landmark pension reform aimed at restoring confidence in the country’s fiscal position in October.

Officials and lawmakers are now shifting focus to overhauling Brazil’s byzantine tax system and cutting red tape.

FX implications

With the early Asian market emphasis being quite high on the Antipodeans, USD/BRL rose slightly to 4.1241 after the announcement with more action expected when the Brazilian markets open.