Brazil Central Bank Opens Door to Interest Rate Hikes in Hawkish Turn

Brazil’s central bank said it won’t hesitate to raise its interest rate as the inflation outlook worsens, marking a significant change in guidance barely a month after pausing a monetary easing cycle, Bloomberg News reported. The committee “unanimously reinforced that it will not hesitate to raise the interest rate to ensure inflation convergence to the target if it deems it appropriate,” central bankers wrote in minutes to their July 30-31 rate meeting, when they held the benchmark Selic at 10.5% for the second straight time.

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Brazil’s Annual Inflation Tops All Forecasts, Supporting High Interest Rates

Brazil’s annual inflation accelerated more than expected by all analysts in early July, supporting traders’ bets the central bank will have to hike borrowing costs later this year after holding them steady next week, Bloomberg News reported. fficial data released Thursday showed consumer prices increased 4.45% from a year earlier, above the 4.37% median estimate from analysts in a Bloomberg survey. Monthly inflation stood at 0.3%. Policymakers are expected to maintain borrowing costs in double-digits for the foreseeable future as inflation forecasts run above the 3% target.
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