At a time when domestic economic and fiscal uncertainty intensified, Brazil's central bank slowed the pace of monetary policy easing and cut key interest rates by 25 basis points.
Policymakers, led by Governor Roberto Campos Neto, cut the benchmark interest rate to 10.5% on Wednesday, in line with the expectations of 22 of 33 analysts surveyed by Bloomberg. The remaining 11 expect Brazil's central bank to cut interest rates by 50 basis points for the seventh time in a row.
Brazil's central bank's key interest rate decision was divided for the first time since August last year. Four of the nine members voted to cut interest rates by 50 basis points.
The Bank of Brazil's decision could once again trigger a tense political situation. Lula is urging his cabinet to put forward proposals to boost economic growth, while many allies continue to criticize Campos Neto for not easing monetary policy fast enough.