Brazil keeps interest rate steady at 13.75%, highest since 2017

By Ovunc Kutlu

ANKARA (AA) - Brazil’s central bank kept its interest rate steady at the highest level since 2017, but said it expects consumer inflation to increase in the second half of this year.

The bank’s monetary policy committee said late Wednesday that the benchmark interest rate was kept unchanged at 13.75%, in line with market expectations.

Banco Central Do Brasil last made a rate hike of 50 basis points in August last year, carrying the rate to 13.75%, the highest level since early 2017, and significantly up from the record low of 2% in March 2021.

"The global environment remains challenging, albeit with some positive revisions on output growth for the year," the bank said in a statement.

"Notwithstanding the recent reduction of headline consumer inflation, the Committee anticipates an increase in the 12-month headline inflation over the second half of the year," it added.

Brazil's annual consumer inflation rate eased further in May to 3.94%, slowing down from the year-on-year gain of 4.18% in April.

Inflation is expected to average 3.4% in 2024, according to the central bank's monetary policy committee.