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30 Aug 2013

BCB raises the Selic rate to 9,0 % pa

This is the fourth rate increase in a row

The leading Selic interest rate in Brazil was between October 2012 and April 2013 at the historically low level of 7.25 % per annum.  On August the 28th the Brazilian Central Bank (BCB) raised the Selic rate by 0.5 %-points to 9.0 % per annum. During the summer optimism has grown in markets of the developed countries and the U.S. central bank has reported a possible end to its loose monetary policy. This means that a larger allocation is in progress, where investors move capital out of the emerging markets and bonds and place it in the more developed economies. This has also affected the Brazilian Real (BRL), which has weakened by about 10% against the last three or four months. Such a scenario could push inflation up and, therefore, the BCB raised its policy rate for the fourth time in a row on 28th August.

"The committee considers that this decision will contribute to put inflation on a decline and assure that this trend will persist next year."

Annual inflation in July was 6.2 7% per annum within the target of 4.5% + / - 2 %-points.

Selic interest rate, 2005-2013
Rente August 13