Brazilian Central Bank Interest Rate Hike
June 16, 2022
The Central Bank of Brazil’s Selic rate was unanimously raised by another 50 basis points to 13.5%. Brazil is one of several Latin American countries with a legacy of past inflationary blowouts and has to be very careful in the current global environment. From a pandemic low of 2.0% up to March 2021, the Selic rate was lifted by a total of 725 basis points over the rest of last year, and that tightening was followed by increases in 2022 of 150 basis points in February, 100 bps in both March and May and now 50 by 50 basis points to 13.25%. Copom, the central bank’s policy committee, released a statement which states:
The Committee considers that, given its inflation projections and the risk of a deanchoring of long-term expectations, it is appropriate to continue advancing in the process of monetary tightening significantly into even more restrictive territory. The Committee emphasizes that it will persist in its strategy until the disinflation process consolidates and anchors expectations around its targets. For its next meeting, the Committee foresees a new adjustment, of the same or lower magnitude.
Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Central Bank of Brazil
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