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Brazil central bank lowers benchmark rate to 4.50%

Banco Central do Brasil lowered its Selic monetary policy rate for the fourth consecutive meeting this year as it raised its inflation projection for 2019 and maintained a forecast of a gradual economic recovery for Brazil.

Members of the monetary policy committee known as Copom unanimously decided to reduce the benchmark rate by 50 basis points to 4.50%. The central bank said the rate cut remains consistent with the convergence of inflation to its target through 2021.

The Copom raised its inflation projection for 2019 to 4.0% from 3.4% previously, and lowered the forecast for 2020 to 3.5% from 3.6%.

"The Committee judges that various measures of underlying inflation are running at comfortable levels, including the components that are most sensitive to the business cycle and monetary policy," the central bank said.

The inflation projections assume a 4.50% Selic rate at the end of 2019 and a rate of 4.25% at the start of 2020, the central bank said, signaling another possible rate cut in the near term. The Selic rate is expected to return to 4.50% at the end of 2020.

Current economic conditions still warrant "stimulative" monetary policy, the central bank added.