Brazilian Central Bank Interest Rate Hike

July 20, 2011

The Bank of Brazil’s monetary policy committee, COPOM, sanctioned a fourth consecutive and seventh overall Selic rate hike, the size of which was an as-expected 25 basis points to 12.50%.  The cumulative increase in this gradual and prolonged cycle of increases stands at 375 basis points.  The first two tightenings in June and July of 2010 were by 75 basis points.  Five prior cuts in the compressed period between October 2008 and June 2009 had slashed Brazils Selic rate from 13.75% to 8.75%.  CPI inflation accelerated sharply to 6.7% in June, surpassing the Bank of Brazil’s target ceiling of 6.5%.  Real GDP is expanding at around a 4% pace.  The next meeting of COPOM is scheduled for August 30-31. 

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.



Comments are closed.