The Central Bank of Brazil rose its benchmark Selic rate to 12.5% from 12.25%, as expected, on Wednesday.
The central bank of Brazil raised interest rates from 12.25% to 12.5% on Wednesday, the highest interest rate in the world.
The Central Bank of Brazil, headed by new chairman Alexandre Tombini, announced on Thursday that the benchmark Selic rate would be raised 50 basis points to 11.25%, one of the highest in the world.
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The BRL recently threatened to breach the 2.15 level, its weakest in years, while the Central Bank of Brazil (BCB) has been in a fairly concerted campaign to stabilize the currency around 2.10, but not weaker than that.
Though the Central Bank of Brazil has clearly shifted more of its attention to inflation from growth in its latest minutes, it is hard to believe that with a still very anemic recovery, the government will allow the dollar to weaken below 1.90.
While this number still shows all the worrying dynamics seen in the January IPCA monthly data, the improvement at the margin plus the fact that seasonal items (like education) will not impact the next releases mean that the Central Bank of Brazil (BCB) can still hope to reach the April rate-setting meeting and not raise interest rates.
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What the Central Bank presidents of Brazil, Russia, India and China want to know is if another round of monetary stimulus is in the cards?
Francisco Lopes, briefly appointed governor of the central bank at the time of Brazil 's devaluation in January, refused to testify under oath to a Senate inquiry into leaks of official information.
Some economists have doubts about another proposed move by the central bank: the abolition of most of Brazil's remaining foreign-exchange restrictions.
In the meantime, the head of Brazil's central bank, Arminio Fraga, is confident that Brazil can cope with the current uncertainties.
The president of Brazil's central bank, Henrique Meirelles, criticized the decision, saying that moves by the U.S. to bolster liquidity in its credit markets through unconventional means could have spillover effects that create dangerous bubbles in such countries as Brazil.
None of this, however, has dampened the ardour of the government's romance with Brazil (whose central-bank chief, Arminio Fraga, is also on the advisory panel).
Frederico Sampaio, chief investment officer at Franklin Templeton Investments in Brazil, says despite a changing of the guard at the Central Bank and in the capital city of Brasilia, the big picture positives have not changed.
The Korean central bank's move came after a similar move in Brazil, where the central bank cut its Selic base interest rate by a quarter of a percentage point to 7.25% Wednesday.
Among central banker types, Mark Carney (currently at the Bank of Canada) and Arminio Fraga (formerly president of Brazil's outfit) have stood out.
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