Brazil central bank cuts benchmark rate for fifth time in a row

Brazil's central bank reduced its benchmark interest rate for the fifth consecutive time on Wednesday, in a bid to stimulate the economy ahead of President Luiz Inacio Lula da Silva's re-election campaign in October. The Selic rate, currently one of the highest globally, was lowered from 14% to 13.75%, following the Federal Reserve's decision to raise rates by 25 basis points to between 3.75% and 4.00%.

This move comes after a series of rate hikes that began in March, prompting speculation that the central bank will soon resume its gradual rate increases. The decision was made despite inflation falling within the bank's target range of 3% plus or minus 1.5 points, with the central bank cautioning that higher-than-usual risks to inflation persist, largely due to surging oil prices and uncertainty surrounding the monetary policies of other leading economies.

Lula, who is contesting for a non-consecutive fourth term in the elections starting October 4th, has been advocating for lower rates to spur growth. Higher interest rates, on the other hand, make borrowing more expensive, discouraging consumption but also curbing inflation.