Inflation Fear Leads Brazil Central Bank to Raise Interest Rates by Steep 0.75%

Brazil Central Bank's headquarters The central bank of Brazil raised interest rates by 0.75% to 13% on Wednesday, July 23, lifting borrowing costs for the third time in four months in a bid to prevent resurgent inflation from undermining economic growth.

The bank's monetary policy committee, Copom, voted unanimously for the increase. In April and June Copom lifted the basic Selic rate by 50 basis points.

In a brief statement, the committee said it opted for a steeper rate increase this time to push "inflation toward the target in a timely manner."

With consumer prices climbing at the fastest pace in almost three years, Brazilian officials have repeatedly sought to talk down inflation expectations in recent weeks by stressing that the government is committed to stabilizing prices.

The benchmark IPCA consumer price index, which the central bank uses as a guide when setting rates, slowed unexpectedly in June from May, but on an annual basis inflation rose at the fastest clip since November 2005.

Even with interest rates on the rise, most economists are now betting that inflation might overshoot the government's year-end target for the first time since 2003. Brazil has an annual inflation target of 4.5% with a tolerance band of 2 percentage points.

A central bank survey of local financial institutions this week showed that the market expects the IPCA to rise 6.53% in 2008, just surpassing the ceiling of the target.

Brazil Central bank president, Henrique Meirelles, was recently quoted by the Financial Times saying that inflation was the greatest threat to the Brazilian and global economies and called on other central bankers to concentrate more attention on inflation than on the risk of recession. He has since spoken of the need to "act vigorously" to keep inflation in check.

However, Meirelles and other ministers have admitted that monetary policy alone cannot overcome inflationary pressures and that there is a need for tighter fiscal policy to curb overall demand by cutting government spending.

Mercopress

Tags:

  • Show Comments (2)

  • AUGUSTUS

    AUGUSTUS PROVIDES ADDITIONAL EVIDENCE ABOUT SWISS HATREAD FOR FOREIGNERS — HELVETIA HORRIFICA!!!
    ADDITIONAL EVIDENCE TAKEN FROM THE INTERNET
    THE ABHORRENT OVERALL DISPOSITION OF AVERAGE SWISS CITIZENÀ¢€™S VIS-Àƒ€-VIS NON-EUROPEANS IS HARSH AND GHASTLY!!!
    NO WONDER CERTAIN ELEMENTS LOUDLY DISPLAY THEIR UNCONCEALED HATRED TOWARDS BRAZILIANS
    WE SHOULD NOT TOLERATE THIS NEO-NAZIS FROM HELVETIA !!!
    QUOTE
    POLITICIANS who make use of divisive and reckless populism to gain votes, put post-war European democratic standards and values at risk. This was most dramatically shown in Italy, in November 2007, when, shameful, deportation policies, based on the collective punishment of all Romanian immigrants (read Roma), were introduced by a centre-left government. This followed the arrest of a Roma for the sexual assault and murder of Giovanna Reggiani, the 47-year-old wife of a navy captain whose body was found in a ditch near her home in Rome. But, in Switzerland, too, thanks to populist proposals advanced by the extremist Swiss People’s Party (SVP), the notion of ‘collective punishment’ is on the agenda. The SVP believes that the entire family of a criminal under the age of 18 should be deported as soon as sentence has been passed. If such a law were passed, say civil libertarians, it would be the first such law in Europe since the Nazi practice of Sippenhaft – or kin liability – whereby relatives of criminals were held responsible for their crimes and punished equally.
    But examination of electoral issues also reveals something far more encouraging, that the resort to tactical populism has spurned a new resistance. In Rome, it was the Jewish community, utilising the slogan ‘one man guilty, not a whole people’, who mobilised via the EveryOne Group to oppose the climate of anti-Roma hatred. In Switzerland, racist images deployed by the Swiss People’s Party in its election campaign (a poster, in cartoon form, depicted three white sheep standing on a Swiss flag, with one of the sheep kicking out a black sheep with a flick of its back legs) gave rise to the broad-front politics of the Black Sheep Committee. Meanwhile, in France, young people of immigrant descent living in the neglected and run-down banlieues are defending themselves from demonisation and criminalisation. Truth and Justice was formed to defend those arrested, counter police mis-information and ensure that the perspectives of the youth of Villiers-le-Bel inform the media debate.
    UNQUOTE 🙁
    THESE SWISS MONSTERS SHOULD BE LABLED “PERSONNA NON GRATA” IN THIS BLOG – THEY ARE TOO SHAMEFULL TO CRITICIZE ANY OTHERS 🙁

  • ch.c.

    Yessssss…..”by cutting government spending. ”
    Make sure to understand what this means :
    – Budget cuts for infrastructure, education, healthcare, social programs !

    – Budget increase for the municipal/states/federal bureaucrats and politicians….OF COURSE !!!!

    – And stealing more by the corrupted politicians ! That is one way to show the purse is…SMALLER…thus less is spent…in the official accountings !!!!

Your email address will not be published. Required fields are marked *

comment *

  • name *

  • email *

  • website *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Ads

You May Also Like

How the Dumb Blonde Is Outsmarting the Dumb Portuguese in Brazil

I don’t believe I heard any blonde jokes before the Web made its debut ...

Brazil’s Primary Surplus to Drop Below 4% of GDP

Brazil posted a 4.32% of GDP primary surplus in 2006 compared to 4.83% in ...

How to fabricate racism

In the end, sometimes not even a line of the original dispatch survived. But ...

Venezuela’s Deals Are Too Good to Pass, But Brazil Has Been Resisting

While crowds of cheering supporters gathered outside the National Assembly in Venezuela on August ...

Despite All Brazil and US Have Common Goal in Middle East, Says Deputy Secretary of State

US deputy secretary of State, William Joseph Burns, talked yesterday, March 1st, in Rio ...

With Brazil White House’s First Facelift Over Lula Moves Back In

After half a century since its opening the Brazilian White House, the Palácio do ...

US Fills a Plane with 300 Brazilians and Ship Them Back Home

Members of Brazil’s Joint Congressional Investigation Committee that is looking into the emigration of ...

Brazilian Courts Keep Meddling with the Press and Censoring It

On the eve of the second round of Brazil’s general elections on October 29, ...

Brazil’s Chico Buarque Brings to Manhattan His Charm and Wit

You realize you are sitting in a dominantly Brazilian audience when “The Satanic Verses” ...

Brazil Starts to Fix Its Roads

Brazil’s Ministry of Transportation will immediately employ on road restoration US$ 581 million (1.5 ...