UPDATE 1-Brazil new central bank expected to keep rates steady despite recession
(Adds central bank guidelines for post-meeting statement)
By Alonso Soto
BRASILIA, July 20 (Reuters) - Brazil's central bank will likely leave interest rates unchanged on Wednesday, in the first decision by a new board expected to exercise caution in the face of political uncertainty and high inflation expectations.
All but one of 43 economists in a Reuters poll expect the bank to hold its benchmark Selic rate at 14.25 percent for the eighth consecutive time. One expects a 50 basis-point cut.
Even with a recession well into its second year, new central bank governor Ilan Goldfajn has vowed to maintain rates at near 10-year highs to curb inflation expectations in a country scarred by bouts of hyperinflation as recently as the early 1990s.
Goldfajn and the four new members of the nine-seat board have tied future rate cuts to the approval by a divided Congress of measures to cap public spending and reduce pension benefits.
The central bank said on Wednesday that it will publish the rate decision exclusively online right after the monetary policy meeting at around 6 p.m. (5 p.m. EDT/2100 GMT), rather than the traditional reading of a statement by a central bank spokesman.
It said it will also alter the format of both the decision statement and minutes but gave no more details. Investors are expected to carefully parse the statement for any hints of how long Goldfajn plans to keep rates on hold.
"Continued high inflation expectations combined with a complex political environment - with some uncertainty regarding the passage of economic reforms, mainly those related to fiscal policies - remain barriers to monetary flexibility," Sao Paulo-based broker Brasil Plural said in a research note. Continuación...