Brazil: Central Bank decides to raise interest rate for the fourth consecutive meeting

At its 29 April meeting, the Central Bank’s Monetary Policy Committee (COPOM, Comite de Politica Monetaria) decided to raise the benchmark SELIC interest rate by a further 50 basis points, from 12.75% to 13.25%. The SELIC interest rate is now at its highest level since December 2008. The move was in line with market expectations and represented the fourth consecutive decision to raise rates amid the worsening inflation outlook for the country.

In the brief accompanying statement, the Bank commented that the decision to increase the SELIC interest rate was unanimous. In addition, the Bank explained that the hike is consistent with its assessment of the inflation outlook and current macroeconomic situation in the country. The announcement comes amidst a backdrop of stagnating economic growth and high inflation for Latin America’s largest economy. While policy makers have been trying to shift Brazil’s economy into a higher gear, growth has been muted and the rapid weakening of the Brazilian real has been contributing to worsening inflation expectations.

LatinFocus Consensus Forecast participants see the SELIC rate ending 2015 at an average of 13.13%. Panelists see the SELIC rate ending 2016 at an average of 11.71%.