Brazil Holds Key Rate at 13.75% as Lula’s Spending Plan Adds to Inflation Risk

Brazil’s central bank pledged to keep interest rates stable until cost of living expectations move toward target, adding hawkishness to the message by raising its own inflation estimates on concerns about growing public spending by the new administration.

The bank maintained the benchmark Selic at 13.75% for a third consecutive meeting late on Wednesday, as expected by all analysts in a Bloomberg survey. It was the last rate meeting before Luiz Inacio Lula da Silva assumes the country’s presidency on Jan. 1.