BRAZIL’S central bank raised its key interest rate for the ninth straight time yesterday, as Latin America’s biggest economy continues to reel from surging inflation, now exacerbated by the Ukraine war.

The bank’s monetary policy committee raised the benchmark Selic rate by one percentage point, to 11.75%, in line with analysts’ forecasts, citing inflation that “continued to negatively surprise” policy makers.

Brazil has waged one of the most aggressive interest-rate tightening cycles in the world as it struggles with spiralling prices driven upward by the fallout of the coronavirus pandemic and now Russia’s invasion of Ukraine.

The latest increase dialled back the pace of monetary tightening a notch – the previous three Selic increases had been by 1.5 percentage points each.

But the committee “considers that, given its forecasts on the risk of inflation expectations remaining above target for a longer term, it is appropriate for the cycle of monetary tightening to continue advancing significantly into even more contractionary territory,” it said in a statement.

The decision was unanimous by the committee’s nine members, who next meet May 3 and 4, it said.

Brazil’s annual inflation rate stands at 10.54%, far above the central bank’s target of 3.5%.

The economy exited recession in the fourth quarter of 2021, but remains sluggish – and has emerged as a crucial weak spot for President Jair Bolsonaro as he gears up to seek reelection in October.

The move came the same day the US Federal Reserve raised its benchmark rate a quarter-point, its first increase since December 2018. – AFP, March 17, 2022.