Brazil’s central bank increased its benchmark interest rate for the 12th consecutive day on Wednesday, blaming an “adverse and volatile” global economy and indicating that its aggressive tightening cycle may not yet be over.
In line with market forecasts, the bank’s monetary policy committee increased the benchmark Selic rate by 0.5% points, to 13.75%. The bank also warned that additional rate increases may be on the way, although many analysts had predicted Brazil’s hardline rate hikes would end there.
“The committee will evaluate the need for a residual adjustment of lesser magnitude at its next meeting” from September 20 to 21, it said in a statement.
It stated that all nine members of the committee agreed on the choice. As of this moment, the benchmark interest rate is at its highest level since January 2017. Brazil’s economy grew by one percent in the first quarter, but experts warn the second half of the year looks bleaker.
With soaring prices for food and fuel hurting Brazilian families, the weak economy has become a major liability for President Jair Bolsonaro as he campaigns for reelection this October.
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