By William Jones, Contributing Reporter

RIO DE JANEIRO, BRAZIL – The Brazilian Central Bank has raised interest rates to a two-year high in a bid to control growing inflation. The organ signaled to the country’s banks that it is ready to stop its aggressive monetary policy with this being its final increase.

Brazil Interest Rates at 2-Year-High, Rio de Janeiro, Brazil News
Banks such as Bradesco believe that this is the beginning of the end for high interest rates, photo by Eduardo P/Wikimedia/Creative Commons License.

The Central Bank has raised interest rates for the ninth time in a row following an increase in inflation and especially food prices. Current interest rates stand at eleven percent. Despite this, experts are suggesting that the change in the banks language on revealing the interest rate hike shows that this will be the last time they do so.

The decision was unanimous amongst the Central Bank’s monetary policy committee who said they “will monitor the evolution of the macroeconomic outlook until its next meeting, to then define the next steps in its monetary policy strategy.”

Brazil’s banks have been faced with escalating interest rates since Brazil began raising borrowing costs in April 2013 when the rate was at a historic low of 7.25 percent. Now the rate is at a banks seem confident that the rate will start to decline.

“Compared to the statement from the previous meeting, the Committee withdrew the expression ‘Continuing’ and includes the words ‘this time.’ Both changes indicate, in our view, the intention of stopping soon the cycle of high interest,” an Itaú Unibanco statement read. Bradesco – another Brazilian bank – interpreted the Central Bank’s language similarly. In a report signed by Bradesco’s chief economist, Octavio de Barros, he highlighted the use of the phrase “at this time” by the Central Bank.

Read more (in Portuguese).

* The Rio Times Daily Updates feature is offered to help keep you up-to-date with important news as it happens.


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