BRASÍLIA: Brazil’s Central Bank kept its key interest rate unchanged at 14.25 percent on Wednesday (Thursday in Manila), in a move aimed at battling inflation that was anticipated by the markets.
With a vote of six to two, the bank said its monetary policy committee voted to maintain the rate based on an analysis of Brazil’s macroeconomic situation and inflation outlook.
The decision comes as the world’s seventh-largest economy struggles with a steep recession and an inflation rate that reached 9.93 percent in October, the highest in more than a decade.
Reflecting the deepening trouble for Latin America’s largest country, the International Monetary Fund predicted a three percent shrinkage in Brazil’s economy this year.
Government figures released this week are even more pessimistic, with forecasts that GDP will contract 3.1 percent this year and 1.9 percent the next.
This comes in stark contrast to just several years ago—in 2010, the Brazilian economy grew a spectacular 7.5 percent, followed by more modest growth.
Brazil’s currency is also in trouble, with the real losing about 30 percent of its value against the dollar. Unemployment has risen for eight consecutive months to stabilize at 7.6 percent, the highest rate since 2009.