Central Banks
Brazil Delivers Jumbo Rate Hike and Cues More in Potent Move
- Median forecast in survey was for smaller, 75-basis point hike
- Economists raising inflation, key rate forecasts through 2027
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Brazil’s central bank lifted its key interest rate by one percentage point and surprised investors by promising two more hikes of the same size, its strongest move yet to recover investor confidence and tame inflation expectations that have been propelled by public spending and a hot economy.
Board members boosted the Selic to 12.25% late on Wednesday as expected by 14 of 35 economists in a Bloomberg survey, with all others expecting a smaller rise. In an accompanying statement, they wrote that the outlook has been marked by a further de-anchoring of inflation expectations and stronger-than-expected activity, which together require even more restrictive monetary policy.