Brazil Central Bank to Step Up Rate Hike Campaign

• The Brazilian central bank will step up its campaign to raise interest rates with a big 75 basis point hike on Dec. 11, possibly also hinting at more restrictive monetary policy next year, a Reuters poll showed.
• This would mark the third consecutive rate hike as inflation accelerates, following increases of 25 basis points in September and 50 basis points last month, bringing the Selic benchmark rate to 12%
• Banco Central do Brasil (BCB)'s rate hike acceleration coincides with the U.S. Federal Reserve's recent caution on its cutting push in the face of the risk of a resurgence in consumer prices in 2025.
• The majority of analysts, 31 of 40, predicted a 75 basis points increase on Dec. 11 to 12% from the current 11.25%. Five called for a more moderate 50 basis points increment, while four anticipated a steeper full percentage-point hike.
• BCB's incoming chief highlighted those current conditions, which pointed to "higher interest rates for longer" and said that the bank would not intervene in foreign exchange markets despite the turbulence there that has stoked imported inflation pressure.
• Brazil's consumer prices rose more than anticipated in the month to mid-November, driving annual inflation to 4.77%, above the central bank's target range of 1.5% to 4.5%.
• Looking ahead, the Selic rate is expected to reach a peak of 13.50% in the second quarter of next year and hold steady until the final quarter of 2025. At that point, median forecasts from a smaller sample anticipate a 0.50 percentage point reduction, bringing it to 13.00%.

(Sources: Reuters & US News Money)