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Brazil central bank mulled cut in Selic before deciding to hold

Banco Central do Brasil said they had considered reducing the benchmark Selic rate during the monetary board's latest meeting, but eventually left the rate unchanged at 6.50%, according to minutes published May 22.

The central bank initially thought of reducing the Selic by 25 basis points to 6.25%, to "mitigate the risk of delayed convergence of inflation towards the targets."

Inflation projections have been set at 3.6% and 3.9% for 2018 and 2019, respectively, while the central bank expects the benchmark rate to reach 6.5% per annum at the end of 2018 and 8.0% per annum by 2019.

The monetary board also acknowledged that they have been expected to reduce the interest rate, but they had to rethink their decision and maintained the benchmark rate.

"In the end, the understanding prevailed that the focus on the best possible decision, given the set of information available at the time, results, over time, in greater credibility for monetary policy," the minutes read.