brazil central bank hikes base rate to 1225
Last Updated : GMT 06:49:16
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Last Updated : GMT 06:49:16
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Brazil central bank hikes base rate to 12.25%

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Arab Today, arab today Brazil central bank hikes base rate to 12.25%

Brasilia - AFP

Brazil's central bank boosted its main interest rate to 12.25 percent, a quarter-point increase, extending its effort to rein in inflation in the booming South American economy. The increase keeps the base rate at the highest in the G20 group of developed and emerging economies and was the fourth hike this year. The quarter-point rate increase, decided unanimously, continues the "gradual adjustment of monetary policy" aimed at keeping prices under control, a statement from the central bank said. The latest figures for May showed a 0.47 percent increase in prices, below the April pace of 0.77 percent but over 12 months inflation has been running at 6.55 percent, topping the official target of 4.5 percent. President Dilma Rousseff, who only took over from predecessor Luiz Inacio Lula da Silva on January 1, had promised to bring the rate down, but has been caught by rising consumer prices. Although hiking the interest rate will make credit more expensive in Brazil, it will also further enhance the country's allure to foreign investors who are guaranteed rate-linked returns higher than for any other big economy in the world. That will inevitably push the real up further against the dollar -- which can hurt the economy by making exports more costly. The real has already soared more than 100 percent against the greenback over the past eight years. "Even though inflation fell in May, it is still very high. The Central Bank is worried and wants to bring it down in 2012 and 2013 to a level as close to 4.5 percent as possible," economist Silvia Matos told AFP. Apart from inflation, Brazil also has the highest interest rate of all of the G20 group which brings together the main industrialized and developing nations. The government has already said that it is hoping for a GDP growth of around 4.5 percent to 5.0 percent this year, much lower than the 7.5 percent recorded in 2010. But analyst Matos said he believed Brazil's growth this year would only be 3.9 percent, reaching 4.1 percent in 2012.

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brazil central bank hikes base rate to 1225 brazil central bank hikes base rate to 1225

 



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