Brazil's Central Bank has lowered the benchmark interest rate (SELIC) for the fourth consecutive time. By unanimous decision, the Monetary Policy Committee (COPOM) cut the SELIC rate by 0.75 percentage points from 13% to 12.25% per annum. The resolution was approved Wednesday (Feb. 22).

In a statement, the COPOM said inflation is losing momentum in all economic sectors, with a new disinflation trend seen again in food prices.

The Central Bank has actually conceded that some internal projections based on estimates from financial institutions for inflation and SELIC may pave the way for it to cut the interest rate close to three percentage points further by the end of the year.

“The COPOM's inflation forecasts in the market scenario retreated to around 4.2% for 2017, and remained around 4.5% for 2018. This scenario assumes a path for the policy interest rate that ends 2017 and 2018 at 9.5% and 9%, respectively,” the Central Bank's statement read.

The SELIC rate is the main instrument used by the Central Bank to control official inflation as measured by the Broad National Consumer Price Index (IPCA). It is used for trading public bonds under the Special System of Settlement and Custody (SELIC) and provides a reference for the other interest rates in the economy.

Interest cuts tend to boost the economy by serving as an incentive for production and consumption in periods of weak economic activity. The cut announced Wednesday (22) has brought the SELIC rate back to the same level it was in March 2015.