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. This was the first meeting ofCopom that was led by the central bank's new chief, Ilan Goldfajn.