BRASIL: Central Bank Raises Selic Interest Rate BY 50 Points To 11.25%.

BLOOMBERG/

    In a widely expected move and a unanimous vote, the central bank under new head Alexandre Tombini (pictured), raised Brasil's Selic bank rate by 50 basis point from 10.75 to 11.25% to combat 2010's above target inflation of 5.91 %...as the economy surged with 7.5 % growth.
   One observer commented that the announcement was “on the dovish side given that we have no indication that the pace of rate hikes will speed up, or remain on the 50 basis-point path. Clearly this is the first of a cycle.”
  Another told AFP :"I have no doubt that putting the rate at 11.25% will facilitate speculative capital inflows. This will undermine competitivity from Brazilian industry and increase public spending."
    The real interest rate -- 11.25% minus the 5.91% inflation rate -- is still among the highest in the world so  investors will continue to invest "hot money" there.