Brazil’s central bank raised the Selic rate to a six-year high of 12.75 percent on March 4th. The decision was widely expected in a wake of stubbornly high inflation.
Policymakers raised rates for the fourth straight meeting, in an attempt to stop the real depreciation and curb inflationary expectations. Yet, given that the Brazilian economy may fall into recession, it is not urgent to tighten monetary policy anymore.
3/5/2015 12:22:21 AM
Brazil Raises SELIC Rate to 12.25%
Brazil increased its key interest rate by 50bps to 12.25% on January 21st. It is the third consecutive hike, aiming to curb stubbornly high inflation and bringing the rate to its highest level since mid-2011.
Published on 2015-01-21
Brazil Raises SELIC Rate to 11.75%
The Central Bank of Brazil decided to raise the benchmark interest rate by half a point to 11.75 percent on December 3rd amid high inflation, low economic growth and falling currency.
Published on 2014-12-04
In the past six months, Brazil’s real lost more than 24 percent against the USD (9 percent since the beginning of 2015), as investors show concerns over the country’s growth outlook. In January, the inflation rate hit a 3-1/2-year high of 7.14 percent and in the mid-month to February the prices rose to 7.36 percent.
According to a recent central bank survey, the economy is expected to shrink 0.58 percent in 2015, the worst contraction in 25 years. Retail sales have been slowing since mid-2014 and edged up a meager 0.3 percent year-on-year in the last month of 2014. Also, in January, industrial production shrank by 5.2 percent year-on-year, the eleventh consecutive month of contraction. In spite of weak growth numbers, in the first month of 2015, the government announced a series of tax increases aiming at raising government revenues which are likely to hurt consumption and create additional inflationary pressure.