The Brazilian central bank announced the 50 basis points of interest rate hikes, and the benchmark interest rate was adjusted to 13.25%

The Brazilian Central Bank Monetary Policy Committee (COPOM) announced 50 basis points on the evening of the 15th local time, raising the country's benchmark interest rate from the current 12.75%to 13.25%, in line with market expectations. This is the 11th consecutive interest rate hike since March 2021.

The Brazilian Central Bank stated in a statement on the 15th that the current potential inflation indicators of Brazil are higher than the target range of inflation, and the pressure of inflation continues to increase. The interest rate hike aims to curb the continuous rise in inflation. It is expected that the next interest rate interest rate hike policy will continue to implement the interest rate hike policy, and the interest rate hike is "the same or smaller."

From August 2020 to March 2021, Brazil's benchmark interest rate remained at the lowest level of 2%of history. Since March 17, 2021, the Brazilian central bank has opened a new round of interest rate hike. After 10 consecutive interest rate hikes, at the last interest rate meeting on May 4, 2022, the Brazilian central bank raised the country's benchmark interest rate from 11.75%to 12.75%. At present, Brazil's benchmark interest rate has reached its highest level since December 2016.

The interest rate hike conforms to market expectations, but the Brazilian central bank announced that it intends to continue to raise the benchmark interest rate at the next meeting in early August this year, which surprised the market. Earlier, most analysts of the Brazilian financial market have always believed that after the interest rate hike, Brazil's interest rate hike cycle will end. By the end of this year, Brazil will maintain a benchmark interest rate of 13.25%unchanged.

It is understood that the Brazilian central bank held a discussion meeting every 45 days, and its adjustment of the benchmark interest rate was designed to make the inflation rate within the scope of management goals. The 2022 inflation rate management target set by the Brazilian National Monetary Commission (CMN) is 3.5%, which allows 1.5 percentage points to float up and down.

According to the data released by the Brazilian National Geographic Bureau (IBGE), Brazil's inflation rate was 0.47%in May this year, which has slowed down from last month, but has increased by 11.73%in the past 12 months. According to the latest expectations of the Brazilian financial market, Brazil's inflation rate in 2022 will be 8.5%, which is also higher than the 5%upper limit of government management and control goals.

(Source: China News Network reporter Mo Chengxiong)

【Edit: Jinxin】

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