Brazil Central Bank Raises Interest Rates to 13.75% and Does Not Rule Out another Possible Increase

Copom says it will assess the need for an increase lower than 0.5 points at the September meeting

The Central Bank's monetary policy committee promoted another half-percentage point increase in the reference interest rate, from 13.25% to 13.75% per year, extending the longest period of increase in the historical series and taking the Selic to the highest level since 14% in November 2016.

The Central Bank does not rule out the possibility of another increase in September – albeit smaller, by 0.25 points – to try to get inflation under control in the long term.

In the current series, which started in March 2021, there have been an unprecedented 12 successive elevations, which resulted in a total advance of 11.75 points.

In an official communication, Copom evokes uncertainties regarding various scenarios and risks.

Analysts, however, claim that the increase this Wednesday (3) may have ended the present series, noting that consumer inflation, which accumulates 11.9% in 12 months, has begun to cool down.

Translated by Cassy Dias

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