Brazil raised interest rates for the fifth straight time on Wednesday and gave no indication of backing off its battle with high inflation even as Latin America's largest economy struggles to pick up speed.
The central bank raised its benchmark Selic interest rate to 9.5 percent from 9.0 percent as expected by all but two of the 65 economists polled by Reuters last week.
Several economists were surprised the central bank made no changes to the statement accompanying its decision, suggesting it could maintain the current pace of rate increases at its next meeting in November.
"The central bank isn't giving any indication that it will stop the monetary tightening," said Arnaldo Curvello, head of asset management at brokerage Ativa Corretora in Sao Paulo.
"Probably at the next meeting we will have another increase of 50 basis points, but there are doubts in the market about what comes afterwards," he said.
Before the meeting, most economists believed the Selic would end the year at 9.75 percent, according to a weekly central bank poll released on Monday.
But a growing number of economists have started to bet that interest rates could climb back into double digits next year to ensure inflation expectations for 2014 and 2015 fall toward 4.5 percent, the centre of the official target range.
Consumer price data released earlier on Wednesday showed 12-month inflation eased in September for the third straight month to 5.86 percent. But economists in the central bank's survey see little room for inflation to slow further, projecting a year-end rate of 5.82 percent in the central bank survey.
Some analysts say the bank may need to raise rates to between 11 and 12 percent to get inflation back to 4.5 percent.
Source: Reuters
