Growing inflationary pressure led the monetary committee of the central bank (Copom) to increase the basic interest rate, the Selic, by 0.5 percentage points to 11.75% annually this week. The decision came days after the government of President Dilma Rousseff announced a R$50bn (US$30bn) cut in the 2011 budget, also with the aim of containing inflation. But for many analysts, the battle against inflationary pressure this year has already been lost because the budget cut came one year too late, while government claims that the budget cut would not affect investments have been contested.
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