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Brazil central bank eyed hiking rates more than 100 bps By Reuters


© Reuters. FILEPHOTO: This view is of the Brasilia Central Bank Headquarters Building, Brazil. August 25, 2021. REUTERS/Amanda Perobelli/File Photo

By Marcela Ayres

BRASILIA (Reuters) – Brazil’s central bank weighed accelerating the world’s most aggressive monetary tightening, minutes from its last policy meeting showed on Tuesday, but uncertainty about a post-pandemic rebound led it to stay the course on 100-basis-point rate hikes.

Minutes of the September 21-22 meeting when Selic raised its policy rate to 6.25 percent, show that policymakers intend to increase rates by this amount to achieve their inflation targets of 2022.

Brazil has been at forefront of global efforts to combat rising consumer prices. Brazil raised its benchmark rate by 2.00%, a record low rate in 2011, as 12 month inflation surges into double figures.

The bank’s rate-setting panel, Copom, admitted in Tuesday’s minutes, that the baseline inflation scenario was “a little above” 2022 targets for the first, sparking debate over whether tougher policies are needed.

The minutes showed that Copom evaluated both the risks and the benefits of speeding up interest rate increases.

In the minutes, policymakers wrote that they had made an additional 100 basis-point increase last week. They also forecast the third consecutive rate hike next month.

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