Brazil's Central Bank Hikes Rates By 100 Bps, Signals More to Come Amid Fiscal Woes

• Brazil's central bank raised interest rates by 100 basis points on Wednesday and signaled same-size hikes for the next two meetings as it navigates increasing inflation challenges alongside fiscal woes.
• The bank's rate-setting committee, known as Copom, unanimously increased the benchmark Selic rate to 12.25%, highlighting the negative impacts of a recent fiscal announcement by the government on asset prices, inflation expectations, and the exchange rate.
• "The committee judges that these impacts contribute to a more adverse inflation dynamics," said policymakers in the decision statement, the last under Governor Roberto Campos Neto's leadership at the central bank.
• This comes after the release of a highly anticipated spending cut package by President Luiz Inácio Lula da Silva's administration, which failed to meet expectations and has weakened confidence in the government's ability to control the growing public debt.
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(Source: Reuters)