Thursday, May 31, 2012

Falling on deaf ears...

...the lessons of broken monetary policy channels have not deterred Brazil it seems.  As discussed here on numerous occassions, such moves are deflationary and destroy yield income and associated marginal income.

Brazil's central bank cut interest rates on Wednesday for the seventh straight time to a record low 8.50 percent, moving into uncharted territory in a bid to shield a fragile recovery from a gloomy global outlook.
President Dilma Rousseff has made lower interest rates one of the top priorities of her government which is struggling to steer the economy back to the 4 percent-plus growth rates that made Brazil one of the world's most attractive emerging markets in the last decade.
The central bank's monetary policy committee, known as Copom, voted unanimously to lower the benchmark Selic rate 50 basis points from 9 percent, in line with market expectations.
"At this moment, Copom believes that the risks to the inflation outlook remain limited," the bank said in a statement that accompanied the decision. The statement used the exact same language as the previous statement when the bank cut the Selic rate in April.

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