⁍ Brazil’s central bank kept its key interest rate at a record-low 2.00% on Wednesday.

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⁍ The bank’s rate-setting committee left the door open for further ‘small’ cut or cuts.

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⁍ Many economists had expected a more hawkish statement.

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– Brazil’s central bank kept its key interest rate at a record-low 2.00% on Wednesday, maintaining its ‘forward guidance’ pledge to keep rates lower for longer and even the possibility of further easing, despite the recent rise in inflation and fiscal risks. In a statement accompanying the unanimous decision, the bank’s rate-setting committee known as ‘Copom’ said inflation expectations and forecasts remained ‘significantly’ below target, and left the door open for further ‘small’ cut or cuts. Copom said the recent spike in inflation due to food and oil prices and a persistently weak exchange rate is ‘temporary’, but will ‘closely monitor its evolution.’ Many economists had expected a more hawkish statement, especially on the threat to longer-term inflation expectations from growing uncertainty surrounding the government’s ability—or willingness—to get the public finances back on track. “It was more dovish than expected. The central bank tried to downplay the inflation shock, there was less emphasis on fiscal risks (than expected), and it left the door open to another rate cut,” Credit Suisse economist Solange Srour tells Reuters.