Brazil central bank keeps key interest rate at 14.25%

GMT 05:48 2015 Thursday ,22 October

Arab Today, arab today Brazil central bank keeps key interest rate at 14.25%

Brazil's central bank
Sao Paulo - AFP

Brazil's Central Bank kept its key interest rate unchanged at 14.25 percent on Wednesday, in line with analysts' forecasts and with the economy mired in deep recession.

The decision was "necessary" to fight rising inflation, the bank said after a two-day meeting of its monetary policy committee, with Brazil suffering growing levels of unemployment and rising disenchantment with the government of President Dilma Rousseff.

The bank last month warned of a deeper-than-expected recession in the world's seventh-largest economy, with the darkening outlook sending the national currency plunging to new lows.

The bank then projected a 2.7 percent contraction in the Brazilian economy this year, a major revision from its June estimate of a 1.1 percent decline.

It also predicted inflation would spurt to an annual rate of 9.5 percent by the end of the year before subsiding over the next two years.

On both counts, the bank's projections were worse than the government's GDP and inflation estimates.

The unanimous rate decision by the monetary policy committee -- which said it would keep the rate at that level while stubborn high inflation persists -- came just after Congress received a new impeachment petition targeting Rousseff for alleged illegal accounting practices.

The much-anticipated petition, whose mostly opposition authors also include a founder of Rousseff's Workers' Party, was handed over to congressional lower house speaker Eduardo Cunha.

Cunha, among many leading Brazilian figures facing serious corruption allegations connected to an embezzlement scheme at oil giant Petrobras, has not indicated a timetable for his decision.

Rousseff is widely blamed for Brazil's steep recession, rising inflation, massive corruption and gridlock in Congress. Her approval ratings are at around 10 percent.


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