Brazil Raises Rate to 13.75%

Brazil's central bank raised its benchmark interest rate on September 10, to the highest in almost two years in a bid to cool accelerating economic growth that's stoking inflation., 9/26/2008 12:18:11 PM

Policy makers led by Henrique Meirelles voted 5-3, without a bias, to increase the so-called Selic rate to 13.75 percent from 13 percent. That raised the country's real interest rate, which is the Selic minus inflation, to the highest of all 54 countries tracked by Bloomberg.

The central bank, in a statement, said it was raising rates ``to promote the conversion of the inflation to the target trajectory in a timely fashion.''

Falling commodity prices that pushed inflation lower last month to 6.17 percent, from a three-year high of 6.37 percent, have done little to ease central bank concerns that demand growth is outpacing supply in Brazil's $1.3 trillion economy.

Economic growth unexpectedly accelerated to 6.1 percent in the second quarter, a government report showed today, fueling concern that rising demand may stoke inflation. Consumer price increases have exceeded the bank's 4.5 percent target since January.

Brazil Raises Rate to 13.75%