Brazil's central bank hikes rates by 75bp, indicates it may do so again next meeting

Author: Eamonn Sheridan | Category: Central Banks

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

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