Brazil’s central bank steps up tightening with 100 basis-point rate hike, signals more of the same

BRASILIA (Reuters) – Brazil’s central bank raised interest rates by 100 basis points on Wednesday, doubling the pace of tightening to tackle mounting inflationary pressures, including robust economic activity and a weaker currency amid fiscal concerns.

The bank’s rate-setting committee, known as Copom, increased the benchmark Selic rate to 12.25% in a unanimous decision, and anticipated further same-size increases in the next two meetings.

A Reuters poll of 40 economists showed only four anticipating a hike of this magnitude, while a majority of 31 projected a smaller 75 basis-point increase, which would still have marked an acceleration from the previous 50 basis-point rise in November.