Brazil's central bank raised its benchmark interest rate by 75 basis points Wednesday, continuing to wind down its pandemic stimulus stance in the face of rising inflation in Latin America's biggest economy.
The increase -- the third straight -- brings the Selic rate to 4.25 percent, just shy of its pre-pandemic level of 4.5 percent in January 2020.
The unanimous decision by the nine members of the bank's monetary policy committee was in line with expectations, though some analysts had predicted an even bigger hike of 100 basis points.
The committee said in a statement that it expected "another adjustment of the same magnitude" at its next meeting, scheduled for August.
Brazil has again hiked its benchmark interest rate as it faces rising inflation Photo: AFP / Nelson ALMEIDA
"The persistence of inflationary pressure has proven greater than expected," it said.
The central bank is increasingly worried over rising prices, which it has indicated it sees as a bigger threat to the economy than a new slowdown due to Covid-19, even though the latter is still raging in Brazil.
The annual inflation rate came in at 8.06 percent in May, well above the bank's target range of 2.25 to 5.25 percent.
Economic growth meanwhile hit a stronger-than-expected 1.2 percent in the first quarter of the year, returning the economy to its pre-pandemic level.
