As largely anticipated, the Banco Central do Brasil's monetary policy committee, knownas Copom, unanimously decided July 20 to maintain its benchmark Selic rate at 14.25%without bias.
The decisionwas made after looking at Brazil's current baseline scenario and risks which "indicateno room for monetary easing," the central bank said in a news release.
According to the regulator, although the set of indicators releasedsince the last Copom meeting showed a short-term stabilization in economic activity,evidence suggests that the Brazilian economy is still operating with a high levelof idleness.
In addition, the central bank also took into account the marketscenario for inflation in 2017 of around 5.3%, 80 basis points higher than the inflationtarget of 4.5%.
"On the one hand, inflation is higher than expected in theshort term, largely due to food prices, may be persistent; [while] uncertaintiesregarding the approval and implementation of the necessary adjustments in the economyremain," the central bank noted.