MNI BRIEF: Brazil's Copom Hikes 50BPS, Accelerating Tightening
MNI (BRASILIA) - The Central Bank of Brazil (BCB) unanimously decided to accelerate the pace of its rate hikes, raising the official Selic rate by 50 basis points to 11.25% Wednesday, following a 25 basis point increase in September.
The outlook "remains marked by resilient economic activity, labor market pressures, positive output gap, an increase in the inflation projections, and deanchored expectations, which requires a more contractionary monetary policy," the Copom statement said.
This marks the second hike after nearly a year of aggressive easing, and comes amid a worsening inflation outlook driven by fiscal risks and significant currency depreciation. The decision was in line with market expectations.
"The pace of future adjustments of the interest rate and the total magnitude of the tightening cycle will be determined by the firm commitment of reaching the inflation target and will depend on the inflation dynamics, especially the components that are more sensitive to monetary policy," the statement added, offering no direct forward guidance. (See MNI WATCH: Copom Set To Accelerate Hiking Pace To 50BPS)