Brazil's Central Bank Raises Interest Rates by 1 Percentage Point, to 6.25% per Year

For the next meeting, in October, the central bank said that interest rates will rise again in the same line, to 7.25%

The Central Bank's Monetary Policy Committee raised again the basic interest rate —the Selic— by 1 percentage point, to 6.25% per year, this Wednesday (22).

In the statement, the BC indicated that it would increase it again in the same magnitude at the next meeting, at the end of October, which would raise the rate to 7.25%.

"The Copom considers that, at the current stage of the interest rate hike, this pace of adjustment is the most appropriate to ensure the convergence of inflation to the target in the relevant horizon and, simultaneously, allow the Committee to obtain more information about the state. At the moment, the basic scenario and the Copom's balance of risks indicate that it is appropriate for the monetary tightening cycle to advance into contractionary territory," the statement said.

At the previous meeting, in August, the monetary authority had also raised interest rates by 1 point (to 5.25%), the highest increase in 18 years, and said that it would repeat the dose in the next decision. On that occasion, the BC accelerated the pace of the monetary tightening cycle, which had been 0.75 points in previous meetings.

Translated by Kiratiana Freelon

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