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Brazil's central bank surprised financial markets and raised its benchmark Selic rate by 25 basis points to 11.25 percent to ensure that inflation starts to decline next year and 2016.
The Central Bank of Brazil, which last raised its rate in May after nine rate rises, added that six of the members of its policy committee, known as Copom, had voted for the increase - including Chairman Alexandre Tombini - while three had voted to maintain rates.
Economists had widely expected the central bank to keep rates steady until President Dilma Rousseff had time to announce her new key appointments following her narrow re-election.
But the central bank has also been under pressure to raise rates soon to slow consumption that has helped pushed inflation, along with the declining real currency, to 6.75 percent in September from 6.51 percent in August, above the central bank's upper limit of its 2.5 to 6.5 percent target.
The Central Bank of Brazil issued the following statement (translation by Google):
"The Monetary Policy Committee decided to raise the Selic rate to 11.25% pa, without bias, by five votes in favor and three votes for the Selic rate at 11.00% pa
To the Committee since the last meeting, among other factors, the intensification of price adjustments for the economy became the balance of risks to inflation less favorable. In view of this, the Committee considered it appropriate to adjust monetary conditions to ensure, at a lower cost, the prevalence of a more benign outlook for inflation in 2015 and 2016.
Voted for raising the Selic rate to 11.25% pa The following members of the Committee: Alexandre Antonio Tombini (Chairman), Aldo Luiz Mendes, Anthero de Moraes Meirelles, Carlos Hamilton Vasconcelos Araújo and Sydney Correa Marques. Voted by the Selic rate at 11.00% pa The following members of the Committee: Altamir Lopes, Luiz Awazu Pereira da Silva and Luiz Edson FELTRIM."
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The Central Bank of Brazil, which last raised its rate in May after nine rate rises, added that six of the members of its policy committee, known as Copom, had voted for the increase - including Chairman Alexandre Tombini - while three had voted to maintain rates.
Economists had widely expected the central bank to keep rates steady until President Dilma Rousseff had time to announce her new key appointments following her narrow re-election.
But the central bank has also been under pressure to raise rates soon to slow consumption that has helped pushed inflation, along with the declining real currency, to 6.75 percent in September from 6.51 percent in August, above the central bank's upper limit of its 2.5 to 6.5 percent target.
The Central Bank of Brazil issued the following statement (translation by Google):
"The Monetary Policy Committee decided to raise the Selic rate to 11.25% pa, without bias, by five votes in favor and three votes for the Selic rate at 11.00% pa
To the Committee since the last meeting, among other factors, the intensification of price adjustments for the economy became the balance of risks to inflation less favorable. In view of this, the Committee considered it appropriate to adjust monetary conditions to ensure, at a lower cost, the prevalence of a more benign outlook for inflation in 2015 and 2016.
Voted for raising the Selic rate to 11.25% pa The following members of the Committee: Alexandre Antonio Tombini (Chairman), Aldo Luiz Mendes, Anthero de Moraes Meirelles, Carlos Hamilton Vasconcelos Araújo and Sydney Correa Marques. Voted by the Selic rate at 11.00% pa The following members of the Committee: Altamir Lopes, Luiz Awazu Pereira da Silva and Luiz Edson FELTRIM."
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