50-Basis Point Brazilian Rate Hike Matches Expectations
March 2, 2011
COPOM, the Bank of Brazil’s policy-making committee, increased its Selic rate to 11.75% from 11.25%, bringing cumulative tightening over the past eleven months to 300 basis points in five steps. Such reverses 60% of the easing done during the first seven months of 2009, which also was implemented in five steps. A brief statement from officials implied more increases are likely in the future.
Brazilian inflation exceeds the central bank’s 4.5% medium-term target, having accelerated from 5.0% in October to 5.5% in November, 5.9% in December, and 6.0% in January. Manufacturing activity is now expanding robustly. The factory purchasing managers index was marginally below 50 in October and November but then reverted to expanding territory with readings of 52.4 in December, 53.1 in January and 54.6 last month. The next meeting of COPOM is scheduled for April 19-20.
Copyright Larry Greenberg 2011. All rights reserved. No secondary distribution without express permission.
Tags: Brazil
ShareThis
