Central Bank of Brazil Raises Selic Rate to 10%
The Monetary Police Committee of the Central Bank of Brazil decided on November 27th to raise the benchmark interest rate by 50 bps to 10 percent, as widely expected. Borrowing costs came to double-digit as a weaker currency and widening budget deficit were lifting inflation pressures.
11/27/2013 11:47:19 PM
In a unanimous vote, the Monetary Police Committee (Copom) increased the selic rate for the sixth time this year to the highest rate since March of 2012. The Copom said the rate hike continues the interest rate adjustment that begun at last April’s meeting.
In October, annual inflation rate remained almost unchanged at 5.84 percent, from 5.86 percent in September. However, on a monthly basis, prices accelerated for the third straight month to 0.57 percent due to higher food prices. The Central Bank targets the inflation rate at 4.5 percent plus or minus two percentage points.
Since the beginning of the year, Brazilian real has depreciated almost 11 percent.
In October of 2013, Brazil’s federal government posted the widest primary budget deficit in almost five years, bringing the probability of credit rating downgrade closer.