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Significance
The decision was taken despite inflation that reached 10.67% last year. It came days after President Dilma Rousseff signed into law the 2016 federal budget, which foresees a GDP contraction of 1.9% and a primary surplus corresponding to 0.5% of output -- both widely seen as overoptimistic assumptions. Amid a recession that could wipe some 6-7% off the Brazilian economy in two years, both the Central Bank and the government are under increasing pressure to adopt pro-growth policies.
Impacts
High-frequency indicators suggest the recession may have bottomed out.
However, for now, this would only mean slower deterioration.
Overall, 2016 will be another year of strong contraction.
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2016
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