Brazil Raises Interest Rates to 13.25% Amid Inflation Concerns

Brazil's central bank has raised its benchmark Selic rate to 13.25%, marking the second consecutive increase amid rising inflationary pressures. The decision, made unanimously by the new central bank chief Gabriel Galipolo, is intended to combat inflation projected to reach 5.2% in 2025, significantly above the 3% target. Analysts anticipate another hike in March, potentially pushing the rate to 14.25%, and some expect it could peak at 15% by May. This tightening monetary policy contrasts with the U.S. Federal Reserve's decision to pause rate hikes, highlighting differing economic strategies between the two nations. Concerns over Brazil's public debt and fiscal discipline are adding pressure on the government, as high rates are impacting consumer financing and economic growth. The central bank's actions reflect its commitment to controlling inflation despite political pressures from President Lula's administration.