LatinNews Daily - 09 December 2021

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In brief: Brazil’s BCB raises interest rates again

* The monetary policy committee (Copom) in Brazil’s central bank (BCB) has unanimously agreed to raise the country’s benchmark interest rate, the Selic, by 150 basis points to 9.25%. The Selic, which stood at 2% at the beginning of 2021, is now at its highest point since 2017. The Copom has indicated that it expects to enact another rate hike of the same magnitude when it next meets in early 2022, saying that it will stand by its policy of monetary tightening until both “the process of disinflation and the anchoring of forecasts surrounding [inflation] targets” are consolidated. The BCB has adopted an aggressive monetary tightening policy in the face of soaring inflation in Brazil – inflation currently stands at 10.67% – but its successive rate hikes are now being criticised by representatives from the business sector, such as the lobby Confederação Nacional das Indústrias (CNI), which worry that the high cost of credit and slower demand will further hurt businesses which are still struggling to recover.

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