Financial News: Brazil Central Bank Raises Rate By 100 Bps;

Brazil Central Bank Raises Rate By 100 Bps; Signals Smaller Hikes

(RTTNews) - Brazil's central bank raised its benchmark rate sharply by 100 basis points and signaled adjustment of lower magnitude in the next meeting.

The monetary policy committee, known as Copom, raised the selic rate by 100 basis points to 14.25 percent, the highest since 2016.

The decision came on the day when US Federal Reserve left its interest rate unchanged. But the Fed signaled that it is still likely to lower rates later this year.

The Copom noted that the global environment remains challenging due to the economic policy and outlook in the United States.

Further, the Copom observed that the current scenario is marked by additional deanchoring of inflation expectations, high inflation projections, resilience on economic activity and labor market pressures, which requires a more contractionary monetary policy.

"In light of the continuation of the adverse scenario for inflation convergence, the heightened uncertainty and the lags inherent to the ongoing monetary tightening cycle, the Committee anticipates an adjustment of lower magnitude in the next meeting, if the scenario evolves as expected," the Copom said.

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