Tags: Brazil | Hikes | Key | Interest | Rate

Brazil Hikes Key Interest Rate to Thwart Inflation

Thursday, 10 Jun 2010 02:53 PM

Brazil's Central Bank hiked a key interest rate to 10.25 percent in a bid cool down its red-hot economy and stave off the expected resulting inflation.

The increase Wednesday in the benchmark Selic interest rate from 9.5 percent — the second hike in two months — was widely expected.

On Tuesday, Brazil's government reported first-quarter growth of 9 percent and increased its forecast for 2010 expansion to 6.5 percent, up from 5.5 percent.

Most analysts expect the Central Bank to continue raising the Selic rate until it hits near 11.75 percent by the end of this year.

The bank's monetary-policy setting committee said in a statement after its meeting that the rate increase was unanimous and made "to ensure convergence of inflation on the targeted path."

The government's inflation target is 4.5 percent.

Also Wednesday, the IBGE government statistics agency said consumer prices rose 0.43 percent in May, compared with 0.57 percent in April.

May's figure was the lowest rate so far this year.

However, the IBGE said in a statement that annual inflation for the 12-month period ending in May is 5.22 percent compared with 5.26 percent in the previous 12-month period — above the targeted amount.

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Brazil's Central Bank hiked a key interest rate to 10.25 percent in a bid cool down its red-hot economy and stave off the expected resulting inflation. The increase Wednesday in the benchmark Selic interest rate from 9.5 percent the second hike in two months was widely...
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2010-53-10
Thursday, 10 Jun 2010 02:53 PM
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