According to Jinshi Data, the Brazilian central bank launched a rate hike cycle on Wednesday, raising the benchmark interest rate by 25 basis points to respond to the inflation outlook exacerbated by stronger-than-expected economic activity and fiscal problems. The central bank's rate-setting committee, Copom, voted unanimously to raise the benchmark Selic rate to 10.75%, the first rate hike in more than two years.
Although the Federal Reserve had initiated an easing cycle earlier in the day, the Brazilian central bank began moving in the other direction and hinted at further rate hikes to come. "The pace of future interest rate adjustments and the overall amplitude of the just-started cycle will depend on a firm commitment to achieving the inflation target and inflation dynamics," the Copom policy statement read.
