Brazil raises interest rate to 14.75%, highest in nearly two decades

By Mucahithan Avcioglu

ISTANBUL (AA) - Brazil’s central bank raised its benchmark interest rate by 50 basis points on Wednesday, lifting it to 14.75% -- its highest level in nearly 20 years and marking the sixth consecutive hike in the current monetary tightening cycle.

The central bank’s monetary policy committee said the decision aligns with market expectations and reflects the need to combat persistent inflation amid growing global uncertainty.

“The global environment is adverse and particularly uncertain due to the economic policy and economic outlook in the United States, mainly regarding its trade policy and its effects,” the committee said in a statement. “The trade policy has added uncertainties to the global economy, especially concerning the extent of the economic slowdown and heterogeneous effects on the inflation outlook across countries.”

It added that volatility in various asset classes has worsened global financial conditions, posing challenges, particularly for emerging markets facing intensified geopolitical tensions.

Brazil’s policymakers emphasized the need for a "significantly contractionary monetary policy for a prolonged period" to stabilize prices and control inflation.

Looking ahead, the central bank said it will remain cautious, especially given the advanced stage of its current tightening cycle and the lagging effects of previous rate increases. It signaled that flexibility would be essential at its next meeting to respond to evolving inflation data and economic indicators.