The Brazilian central bank's monetary policy committee voted unanimously to hold the benchmark Selic interest rate at 6.50%, noting that the country's economy remains on a path of gradual recovery.
"The committee judges that various measures of underlying inflation are running at appropriate or comfortable levels," Banco Central do Brasil said in a statement. "This includes the components that are most sensitive to the business cycle and monetary policy."
According to the bank's market surveys, inflation expectations for 2019, 2020 and 2021 stand at around 3.9%, 4.0% and 3.75%, respectively. However, a "high level of economic slack" may result in a lower-than-expected inflation trajectory.
On the other hand, "frustration of expectations regarding the continuation of reforms and necessary adjustments in the Brazilian economy may affect risk premia and increase the path for inflation over the relevant horizon," the central bank added.
Commenting on the global outlook, the bank said risks associated with the normalization of interest rates in some advanced economies have receded, but risks related with a slowdown in global growth have risen.