The Brazilian economy mired in recession further in Q3, as the growth rate contracted by 6.18% in Q3.
Being worried for recession, the Brazilian central bank increased rate seven times in last nine month through July. However, the central bank hold its Slice rate unchanged at 14.25% in the past four rate policy meetings.
"Inflation continued to climb in November and December but we think that inflation pressures may well start to abate due to a more stable BRL and economic weakness in the coming months. In the meantime we think that BCB will keep a cautious stance and therefore believe BCB will leave its benchmark rate unchanged at its next policy meeting", argues Danske Bank in a research note.