Brazil central bank to raise rates by 50 bps on Aug. 3

Brazil central bank to raise rates by 50 bps on Aug. 3

Summary : Brazil’s central bank will hike its key rate by 50 basis points next week, a Reuters poll showed on Friday, matching an increase at its last meeting following a year of aggressive moves to combat inflation still running in double digits.

So far this year the central bank has raised rates four times, by 150 basis points, then in two consecutive 100 basis point moves, and then by a smaller half-point in June.

Next week’s move, if expectations are met, could reinforce the view an aggressive monetary tightening campaign that began in March 2021 is nearing an end.

BCB’s decision next week will come after news Brazilian consumer prices increased slightly less than expected in the month to mid-July, marking the lowest monthly increase in two years following government anti-inflation measures such as fuel tax cuts. But the BCB nonetheless is in a different spot from others around the world that are employing aggressive policy moves to tackle price pressures.