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Brazil’s Central Bank sends ambiguous message on interest rate hikes

The monetary authority raised benchmark rates by a half percentage point and said it is appropriate to continue tightening "significantly into even more restrictive territory." But many policy wonks believe it might not pull the trigger

Brazil's Central Bank signals pivot on interest rates
Photo: Antonio Molina /Fotoarena/Folhapress

As expected, the Brazilian Central Bank’s Monetary Policy Committee on Wednesday evening raised the Selic benchmark interest rate by a half percentage point to 13.75 percent a year. The committee has announced hikes in each of its last 12 meetings, which are held 45 days apart.

After enacting one of the world’s steepest monetary tightening processes since the beginning of the pandemic, the bank signaled that it will start easing its policy regarding interest rates.

But while further hikes should be of lower magnitudes, the bank is not ready to completely dial back its policy. “Given [the committee’s] inflation...

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