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For the second straight meeting, the central bank under new chief Alexandre Tombini (pictured) voted to raise the benchmark Selic interest rate...by 50 basis pts...to 11.75%...one of the highest interest rates in the world ...even as its Q4 economy expanded at the slowest pace for 2010.
The higher interest rate is sure to attract more "hot money" from foreign investors seeking high returns...and push the REAL's value even higher vs the USD...and hurt exports.The real has gained 46 percent in the past two years.
The bank also indicated that they may raise borrowing costs again in April to contain the fastest inflation in more than two years.
President Dilma Rousseff told reporters :“We won’t allow inflation by any means to get out of control."
