Brazil raises key interest rate by the most since 2003
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Brazil’s central bank enacted its biggest interest rate rise in almost two decades on Wednesday, with a 100 basis point increase aimed at curbing the risk of spiralling inflation.
Latin America’s most populous nation is witnessing a sharp acceleration in prices as its economy recovers from the Covid-19 pandemic, pinching households and putting pressure on the Banco Central do Brasil, or BCB, to act.
A weak exchange rate, buoyant worldwide demand for raw materials and rising electricity bills because of the worst drought in almost a century have all contributed. Inflation in Brazil exceeded 8 per cent in the 12 months to June, more than double the official target of 3.75 per cent for 2021.
Wednesday’s decision was in line with forecasts from economists polled by Reuters, who had expected the…