Brazil raises rates again by one point

Posted on Sep 23, 2021 at 4:13 PMUpdated Sep 23, 2021, 4:52 PM

Tighten the bolts. This is the message sent by the central bank of Brazil at the end of the meeting of its monetary policy committee on Wednesday, which decided to raise its base rates by one point, as it had done last month. Overall, this is the fifth consecutive Selic rate hike. And the central bank chaired by Roberto Campos Neto promises an additional turn of the screw in December. After having reached its floor rate of 2% at the turn of 2020-2021, the base rate would thus reach 7.25% at the end of this year, that is to say more than in 2019. A real reversal of situation.

The big culprit: inflation. The central bank has long played down the importance of “temporary” shocks, such as rising food prices, then fuel prices. But other elements are increasing the bill: electricity prices have also been raised due to the drought which raises fears of an energy shortage, those of the services are raising their heads according to the reopening of the economy. Not to mention the appreciation of the dollar …

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