Brazil’s central bank on Wednesday announced the raise of its interest rates by 100 basis points. The bank also hinted at a third straight hike of that size scheduled for October.
These moves come as the apex banks confront rising inflation levels with what is now being referred to (in some quarters) as “the world’s most aggressive monetary tightening”.
The apex lender’s rate-setting committee, known as Copom, reached a unanimous decision to increase its benchmark rate to 6.25%. This tallies with the forecast by a striking majority of the economists polled by Reuters.
The decision positions Brazil on the front line of a global fight against rising consumer prices, raising its benchmark rate from a record-low 2.00% in early 2021, as 12-month inflation nears double digits.
Included in Copom’s statement are plans “to advance the process of monetary tightening further into the restrictive territory” with another full percentage point rate increase next month.
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