The monetary authority raised the rate again, in a context of growing inflationary expectations and devaluation of the real.
The central bank of Brazil (BCB) raised the interest rate to 12.25%, amid fears about the acceleration of inflation in Brazil and the recent devaluation of its currency, the real. This is the third increase since September and it is expected that, if the current situation continues, there will be two new adjustments in January and March.
The Monetary Policy Committee reported that the set of economic activity and labor market indicators continues to be dynamic, but expressed concern about inflation, currently at 4.9% annually. “Core inflation and underlying measures have been above the inflation target and have shown an increase in the most recent releases“, highlighted the BCB.
In addition, the Central Bank commented on the announcement of the fiscal package, made by the Minister of Finance, Fernando Haddad. Copom justified that the perception of financial agents affected asset prices and inflation and exchange rate expectations. “It was assessed that such impacts contribute to more adverse inflationary dynamics. The most recent scenario is marked by an additional unanchoring of inflation expectations, an increase in inflation projections, a greater than expected dynamism of activity and a greater opening of the market. output gap, requiring even more contractionary monetary policy“added the note.
Source: Ambito
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