Stock markets reflect austerity in Brazil with surprising SELIC hike and slack in the US

The market repercussion of the decision on the SELIC will be a matter of trust, of investors believing that the Central Bank's signal will serve as an efficient anchor for inflation expectations from now on.

RIO DE JANEIRO, BRAZIL - Two very different messages came from central banks yesterday. While the United States expressed less concern with inflation, in the "we know it's going to rise a little, but it's okay" style, here in Brazil the COPOM (Monetary Policy Committee) surprised everyone with more austerity than some in the market had expected.

The target for the basic interest rate, the SELIC, was raised by 0.75 percentage points to 2.75 . . .

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