Brazil's Central Bank Hikes Selic to 12.25%, Plans Dollar Stabilization Amid Inflation Surge

Dec 12, 2024, 01:30 AM

Brazil's central bank has raised its benchmark interest rate, the Selic, by a full percentage point to 12.25%, marking the third consecutive increase and doubling the pace of its tightening campaign. This decision was influenced by persistent high inflation and an uncertain external environment. The central bank also announced plans to auction up to $4 billion in international reserves to stabilize the dollar. Finance Minister Fernando Haddad expressed surprise at the rate hike, although he noted that markets had already priced in such a move. The rate increase is expected to add an additional R$ 55 billion in costs to the government, according to studies. Analysts and investors are now anticipating further rate hikes, with projections suggesting the Selic could reach 15%.