31 May 2013
Selic rate hiked to 8.00% p.a in Brazil
Second consecutive rate hike by the central bank
The central bank lowered interest rates from August 2011 to early 2013 to stimulate the demand and investment in the Brazilian economy. On Wednesday 26th of May the Banco Central do Brasil's (BCB) interest committee increased for the second time in a row the leading policy rate (Selic). The rate was hiked by 0.50% points to 8% per annum, although this is still a low level in a historical perspective, see figure below. Most market players were expecting an adjustment of approx. 0.25 to 0.50 %-points.
Selic-rente i procent p.a., 2005-2013
The upward rate adjustment was a consequence higher inflation during the past few months. The inflation rate has been near the upper limit of the inflation target of 4.5 % p.a. +/- 2 %-points. BCB's interest rate committee said after the increase:
"The Committee understands that this decision will contribute to lowering inflation and ensuring that the trend continues next year."