Brazil Raises Basic Interest Rate to 10.25% While Country Grows Unheard of 9%

Brazilian real coin Brazil’s Monetary Policy Committee (Copom) from the Brazilian Central Bank (BC) boosted this Wednesday the country’s basic interest rate (Selic) to 10.25% a year, in line with the expectations of the financial market. Analysts expect the rate to continue increasing this year up to 11.75% as a way to contain inflationary pressures.

In a short note, the Copom informed that “in continuation to the process of adjusting monetary conditions to the prospective scenario of the economy, to ensure convergence of inflation to the target’s trajectory, the Copom decided unanimously to raise the Selic rate to 10.25 % a year without bias,” ie without the possibility of revision until the next meeting in 45 days.

This was the second adjustment of the Selic this year. The first occurred at the end of April, when the rate, which serves as a parameter for the national financial system, was fixed at 9.50%, after nine consecutive months at 8.75% – the lowest in the history of the BC since 1964.

Record GDP Growth

Brazil’s economy grew 9% in the first quarter of this year, compared to the same period in 2009. That is the highest GDP growth rate ever recorded in the country, according to the government statistical bureau, the IBGE, which released the numbers.

Industrial sector output increased 14.6%, compared to 2009. The services sector grew 5.9%, and the farm sector was up 5.1%.
Investments in machinery and equipment surged 26%, construction was up 14.9% while imports of goods and services rose sharply by 39.5%.

Following the strongly optimistic remarks made by the president of the Central Bank, Henrique Meirelles, regarding the very strong growth of GDP in the first quarter, a surprised minister of Development, Industry and Foreign Trade, Miguel Jorge, sounded a note of caution.

“We were not supposed to grow that much,” exclaimed the minister after being informed that GDP was up 9%, compared to the first quarter of 2009, and 2.7%, compared to the last quarter of 2009. Jorge pointed out that growth at that rate could generate inflation and create problems with logistics.
“We have a lot of problems with logistics that must be resolved,” said the minister.

ABr

Tags:

You May Also Like

After Overweight Remark Brazil’s Lula Tries to Make Amends with Striker Ronaldo

Football and politics, politics and football, it’s hard to find the leading thread particularly ...

Brazil Goes from 34th to 2nd Place in World’s Organic Farming

The Brazilian federal government will be promoting, as of this Friday, June 23, the ...

Old Ways

Congress has been discussing whether elected officials should hire their own relatives. A congressman ...

Brazilian Airline Gol Celebrates 7th Birthday Flying 7 Million

Brazil Airline Gol, which also owns Varig Airline, has released passenger statistics for the ...

Brazil’s Deadbeats Grow 13%

In comparison with June, consumer delinquency in Brazil was down 3.7% in July, maintaining ...

Brazil Wants to Halve Its Transplant Waiting Line of 63,000

During National Organ and Tissue Donation Week, which runs through Friday, September 30, Brazil’s ...

In Brazil Work Is a Dirty Word Unless You Hold Public Office

If we define statism as an ideology which provides a preferential role for the ...

Brazilian Air Force Gets Second-Hand Mirages as Stopgap Solution

The new Mirage F-2000s that the Brazilian Air Force (FAB) just added to its ...

Jobs Grow 6% and Salaries 2% in Brazil

Brazilian formal employment rose 5.83%  with the creation of 1.831 million jobs in 2005 ...

The Lure of Brazil as World’s Breadbasket

Brazil's minister of Agriculture, Livestock and Supply, Reinhold Stephanes, claims that the Arab countries ...