Brazil’s Central Bank Increases the Selic Rate by 1.5% that Affect USD and BRL
Selic rate increased to 150 basis points on Wednesday, all thanks to the central bank of Brazil that has done this to set a benchmark . It’s the largest hike done by the bank in 20 years. The plans related to the additional financial spending have destroyed the hopes of the long-running inflation expectations but with the recent framework, risk will increase and it will unbalance things. The central bank of Brazil has also released a statement that determines that the market should also expect a rate hike similar to the past at the next policy meeting.
Real, the currency of Brazil is under extreme pressure as of now because the government has declared that it intends to ignore spending terms and help the strugglers with the money. The extra funds may build pressure on the policymakers of the central bank as the policy will continue to tighten at a fast pace to fight inflation. The officials of the central bank announced that they aim to hike 100 basis points or bps at this month’s meeting. However, things have gone more aggressively as the financial viewpoint of the country is shifted.
The rates of the Central bank had not hiked more than 100 basis points since the year 2002. As per the latest policy of the central bank of Brazil, it intends to return the inflation with the bank target. The prices of the consumer are rising as the year will end at 3.75%. This process of controlling the money will keep on picking up the pace as the bank will gain some confidence as per the medium-term prospects of the Brazilian economy. Let’s see how the policy is released and what impact it does on the economy of Brazil. For more information, keep in touch with our blogs and get the ultimate information about the forex news of the world. Read our other news to know more!