Brazil hikes interest rate, signals may tighten further
BRAZIL’S central bank raised its benchmark interest rate for the 12th straight time Wednesday, citing an “adverse and volatile” global economy, and indicated its tightening cycle, one of the world’s most aggressive, may not be over.
The bank’s monetary policy committee raised the benchmark Selic rate by half a percentage point, to 13.75 per cent, in line with market expectations.
And though many analysts had forecast Brazil’s hawkish rate hikes would stop there, the bank said “elevated” inflation meant more could be in store.
“The committee will evaluate the need for a residual adjustment of lesser magnitude at its next meeting” from Sept 20 to 21, it said in a statement.
“Future monetary policy steps may be adjusted to ensure inflation returns in line with targets. The uncertainty of the current economic situation, both domestic and global... demands extra caution.”
The decision was unanimous by the committee’s nine members, it said.
The key interest rate now stands at its highest level since January 2017.
Surging prices for food and fuel have been hurting families in Latin America’s biggest economy, and denting the popularity of far-right President Jair Bolsonaro as he wages an uphill battle to win reelection in October. AFP
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