Brazil’s central bank has unexpectedly cut interest rates as the risk of recession in Europe and the US shifted policy makers’ focus away from the fastest inflation in six years, Economic Times reported.

The bank’s board, led by President Alexandre Tombini, voted 5-2 to cut the benchmark rate a half point to 12% after raising rates at each of the previous five meetings.

"Rethinking the international scene, the Committee considers that there has been a substantial deterioration, reflected in generalized reductions in the magnitude and growth projections for major economic blocs," policy makers said in their statement posted on the central bank's website.

A selloff in world stock markets, which lost nearly $5 trillion this month as Europe tried to stave off a sovereign debt crisis and global growth showed signs of slowing, was a "game changer" for emerging markets that had been focused on cooling their economies, said Marcelo Salomon, chief economist for Brazil at Barclays Plc.

" With this  cut in interest rates, Brazil became the second G-20 country after Turkey to lower borrowing costs in response to the worsening global outlook.

On August 26, Mexico also signaled that it may follow suit. Brazilian president Dilma Rousseff this week redoubled efforts to control spending to help stem inflation that surpassed 7%, in August for the first time since 2005.