Brazil’s Central bank raises the Selic rate by 1pp

Brazil's Central bank rose the benchmark interest rate – the Selic – by 1pp to 5.25% at its meeting on August 4. This is the fourth hike in a row in 2021 and the largest in 18 years at a single meeting.

The decision reflects the accelerating inflation in the country, as the official CPI increased by 8.3% y/y in June, well above the upper limit of the target band for 2021, set at 2.25%-5.25%. In a statement, the Monetary Policy Committee (COPOM) said it expects to raise the Selic rate by another 1pp at the next meeting on September 21.

Further data and analysis on Brazil’s economy are available on the CEIC Brazil Economy in a Snapshot – Q2 2021 report.