Central Bank of Brazil Raises SELIC Rate to 8.5%

In its July 10 meeting, the Bank of Brazil's monetary policy committee raised its benchmark interest rate to 8.50 percent from 8 percent, maintaining the pace of monetary tightening to fight above-target inflation. The decision by the bank's committee was unanimous.

The Committee argued that the decision to raise the rate by 50 basis points for the second successive meeting will contribute to set the inflation on a downward trend and ensure that it continues to decline throughout next year. 

With the interest rate standing at a 15-month high, the Board did not exclude further tax hikes to tame prices. The recent depreciation of the real poses a serious challenge for the central bank, which has pledged to bring inflation below the 5.84 percent mark recorded last year.

In June, the inflation rate hit a 20-month high of 6.7 percent, standing 0.2 percentage points above the upper limit of the Central Bank´s inflation target of 6.5 percent.

Central Bank of Brazil Raises SELIC Rate to 8.5%

Nuno Fontes | nuno@tradingeconomics.com
7/11/2013 10:45:50 AM