Brazilian Central Bank increased the policy rate by 0.75%
Yesterday, the Brazilian Central Bank raised its key rate for the third time this year to 4.25% from 3.5%. The first rate hike took place in March from a record low of 2% to 2.75%. Each time the Central Bank raised the rate by 0.75%.
The reasons for the increase outlined in the communique resemble those reflected by other emerging market central banks: faster economic recovery and higher inflationary pressures.
In May, inflation in Brazil was 8.06% YoY, the highest rate since the autumn of 2016. Core consumer prices rose 4.16% - the highest since summer 2017. The inflation target is 3.75% with a margin of 1.5% in both directions. Current inflation exceeds the upper bound by 2.81%.
Full nameMinistry of the Economy of the Brazil