“Brazil’s central bank accelerated the pace of interest rate increases, as policy makers step up efforts to slow inflation that forestalled the economy’s rebound in the first quarter.
The bank’s board, led by President Alexandre Tombini, voted unanimously to raise the benchmark Selic rate 50 basis points to 8.00 percent, matching the forecast of 19 of 57 economists surveyed by Bloomberg. Thirty-eight analysts expected a second straight 25 basis-point increase.
“The committee considers that this decision will contribute to put inflation on a decline and assure that this trend will persist next year,” policy makers said, according to their statement posted on the central bank’s website.
President Dilma Rousseff’s administration has renewed pledges to slow inflation even as Brazil’s $2.5 trillion economy has expanded less than expected by analysts for five straight quarters. While the government kept borrowing costs at a record low 7.25 percent from October through March and expanded tax cuts to spur activity, stimulus measures have failed to spark growth and driven inflation to the upper limit of the central bank’s target range. Latin America’s biggest economy unexpectedly slowed in the first quarter as higher consumer prices eroded demand.
Swap rates on the contract maturing in July, the most traded in Sao Paulo today, fell two basis points, or 0.02 percentage point, to 7.56 percent. The real weakened 1.7 percent to 2.1106 per dollar.
