Central Bank raises interest to 12.75% p.a.
According to this week's Central Bank report, the financial market expectations for this year include a 0.58% GDP decline- 
The Central Bank Monetary Policy Committee (COPOM) increased the key interest rate (SELIC) for Brazil's economy, from 12.25% to 12.75% per annum. With the increase of 0.5 percentage points, the rate is now at the same level it was in January 2009.
In a statement issued Wednesday (Mar. 4), COPOM explained the move is designed to contain inflation “considering the macroeconomic scenario.” Earlier this week, a report released by the Central Bank said analysts and investors in the financial market were already expecting an increase to 12.75% p.a.
The SELIC provides a baseline for other interest rates, and is used by the Central Bank as a tool to keep the official inflation within the target range set by its economics panel. According to COPOM, the target is 4.5%, ranging between 2 percentage points down (2.5%) and up (6.5%).
Although the base rate helps control inflationary pressures, high rates can also adversely affect economic recovery, making credit more expensive. According to this week's Central Bank report, the financial market expectations for this year include a 0.58% GDP decline, and 13% p.a. SELIC.
Translated by Mayra Borges
Fonte: Central Bank raises interest to 12.75% p.a.
