Brazil's central bank hikes rates by 75bp, indicates it may do so again next meeting
Banco Central do Brasil hikes its benchmark interest rate to 4.25%, as polls expected.
Headlines via Reuters:
- sees continued normalization of policy at next meeting
- sees another policy adjustment of the same magnitude at the next meeting
- deteriorating inflation expectations may require a more forceful reduction of monetary stimulus
- base-case scenario is for normalisation of policy towards neutral rate
- a rate hike at next meeting depends on the evolution of economic activity, the balance of risks, inflation expectations
- future monetary policy steps may be adjusted to ensure compliance with inflation goals
- accompanying current inflation shocks and their potential secondary effects
- adjustment towards neutral rate necessary to "mitigate the dissemination of the temporary shocks to inflation"
- decision was unanimous
- persistence of inflationary pressure more intense than expected
- outlook for electricity rates keeping inflation under pressure in the short run