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Brasil’s central bank has hiked its benchmark rate by 50bp to 11.25%, as expected

Banco Central do Brasil Monetary Policy Committee (Copom) decision:

  • Decision was unanimous.Pace of future interest rate adjustments and total magnitude of the cycle will be determined by the firm commitment to reaching the inflation target.Pace of future interest rate adjustments and total cycle magnitude will depend on inflation dynamics, expectations and projections, the output gap, and the balance of risks.Risks to inflation scenarios are tilted to the upside.Monitors closely how recent developments on the fiscal side impact monetary policy and financial assets.Credible fiscal policy, committed to debt sustainability, contributes to the anchoring of inflation expectations.Credible fiscal policy also contributes to the reduction in the risk premia of financial assets, therefore impacting monetary policy.Says the presentation and execution of structural measures for the fiscal budget is also important for credible fiscal policy.Global environment remains challenging due mainly to the uncertain economic outlook in the United States.

This article was written by Eamonn Sheridan at www.forexlive.com.

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