BRASIL: Benchmark Raised For 4th Time...To 12.25%; More...Bigger BPS Increases...Hinted.

BLOOMBERG

For the 4th consecutive time, the central bank raised its Selic benchmark lending rate for a fourth straight time... by 25 bps...to 12.25%.

President Alexandre Tombini (left) has all but promised to raise it again... perhaps by more than 25 bps... to cool down inflation.

In April, Brasil's annual inflation surpassed 6.5%...the target range's upper limit...for the first time since 2005.

Unemployment is a near record low of 6.4%... and credit is expanding annually at a 20%.

BRASIL: C.Bank Raises Selic By 25 Basis Pts...To 12%.

BLOOMBERG/

   Brasil's central bank directors voted 5 to 2...to raise its Selic benchmark interest rate by 25 basis points...to 12%.
   Two directors wanted...an even higher 50 point increase.
   Many economists also predicted an increase of 50 basis...because of Brasil's historic bugaboo -- runaway inflation.
   New c.bank President Alexandre Tombini (pictured) is trying to fight price rises yet not kill growth...as well as fight off an overvalued currency with an interest rate that attracts much foreign "hot money."
    Inflation has reached 6.44%--its fastest rate in more than two years.
   Yet growth is slowing...after expanding by 7.5 % last year.
   The REAL is now valued at 1.5663 per usd...its strongest since August 2008.

BRASIL: Q4 Growth Slows Even As C.Bank Raises Selic Rate To 11.75.

BBC/

   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."

BRASIL: Central Bank Says Interest Rate Will RiseTo Fight Inflation.

M.PRESS/
    The central bank has issued an alert that because the inflation outlook has become “far less favorable” and growing higher than  the government's target of 4.5%-- there is a “need to implement, in the short-term, a rise in the basic rate of interest.”
    Brasil's Selic rate of 10.75% is already one of the highest in the world.
    Alexandre Tombini (pictured),the new central bank president,  takes office in early January -- and may move quickly to raise rates at the next monetary policy meeting, scheduled for Jan. 18 and 19.
      However, President-elect Dilma Rousseff has vowed to bring down real interest rates in her four years in office.

BRASIL: Profile: Central Bank Chief Alexandre Tombini.

BLOOMBERG/ Matthew Bristow and Iuri Dantas /
    Incoming central bank head Alexandre Tombini, 47, may lack the authority that allowed outgoing bank chief Henrique Meirelles to slow prices to 5.6 percent from 12.5 percent in eight years.
     Tombini has spent most of his professional life at the central bank but his relationship with president-elect Dilma Rousseff is called “a very big uncertainty.”
    He studied at the University of Illinois, in Urbana-Champaign under the guidance of economics professor Werner Baer as did the central bank presidents of Colombia and Paraguay, as well as the President Rafael Correa of Ecuador.

BRASIL: Rousseff Says Bye, Bye Meirelles, Oi Tombini.

BLOOMBERG/ Andre Soliani and Iuri Dantas/
    President-elect Dilma Rousseff has nominated Alexandre Tombini (pictured), 46, as new central bank head replacing long-serving 65-year-old Henrique Meirelles. Rousseff also nominated Guido Mantegna to remain as Finance Minister.
     Tombini has been a central bank board member since 2005.
     “The fact that it is him instead of someone else ensures the central bank won’t be taken by a new heterodox philosophy -- that there will be continuity,” said strategist Tony Volpon.
“Tombini has a good education, he’s a professional,” said economist Pedro Tuesta. "The problem is that this gives the impression that Dilma wants to have greater control of the central bank. I’m not saying that’s the way it is. She gives us that impression, and the impression has a certain base.”