Brazil hikes key interest rate by half-point to 11.75 percent, amid inflation concerns
The Associated PressPublished: April 17, 2008
RIO DE JANEIRO, Brazil: Brazil's central bank raised the country's benchmark lending rate for the first time nearly three years, amid rising concern over accelerating inflation and heated domestic demand.
The bank's monetary policy committee, Copom, voted Wednesday to raise the Selic rate from 11.25 percent to 11.75 percent, following 35 straight months of declines or no change.
"Evaluating the macroeconomic outlook and the prospects for inflation, Copom unanimously decided to raise the Selic rate to 11.75 percent annually," the committee said in a statement.
Copom added that the full half-point hike would "contribute to the swift reduction of risk in relation to the inflation outlook."
Many market participants had predicted the bank would opt for a smaller increase of 0.25 percent
Inflation, as measured by the official IPCA consumer price index, was 0.48 percent in March, Brazil's IBGE statistics institute said. It attributed the rise to accelerating food prices amid a global surge in demand for agricultural commodities.
The figure was down from 0.49 percent inflation recorded in February, but higher than analysts' expectations of about 0.32 percent.
Brazil's 12-month inflation rate rose to 4.73 percent in March, up from 4.61 percent in February. The government's year-end target is 4.5 percent.
The central bank's next interest rate policy announcement is June 4.
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