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Brazil central bank keeps key interest rate at 14.25%

A man walks past a Brazil central bank logo at its headquarters in Brasilia, Brazil, on Sept 23, 2015.

[Brasília] Brazil's Central Bank kept its key interest rate unchanged at 14.25 per cent on Wednesday, in a move aimed at battling inflation that was anticipated by the markets.

With a vote of six to two, the bank said its monetary policy committee voted to maintain the rate based on an analysis of Brazil's macroeconomic situation and inflation outlook.

The decision comes as the world's seventh-largest economy struggles with a steep recession and an inflation rate that reached 9.93 per cent in October, the highest in more than a decade.

Reflecting the deepening trouble for Latin America's largest country, the International Monetary Fund predicted a three percent shrinkage in Brazil's economy this year.

Government figures released this week are even more pessimistic, with forecasts that GDP will contract 3.1 per cent this year and 1.9 per cent the next.

This comes in stark contrast to just several years ago - in 2010, the Brazilian economy grew a spectacular 7.5 per cent, followed by more modest growth.

Brazil's currency is also in trouble, with the real losing about 30 per cent of its value against the dollar.

Unemployment has risen for eight consecutive months to stabilize at 7.6 per cent, the highest rate since 2009.