Brazil raises key interest rate

Brasilia, July 12 (IANS/EFE) The Brazilian Central Bank raised its benchmark interest rate a half-point to 8.5 percent, in a move intended to halt the rise in inflation, it announced.

"The (Central Bank's) Committee (on Monetary Policy) feels that this decision will contribute to placing inflation in decline and ensure that that trend persists next year," the bank said in its statement.

The decision was widely expected by the market due to the fact that inflation reached 3.15 percent for the first six months of the year and 12-month inflation came in at 6.70 percent in June.

Brazilian authorities set as a goal for this year a rise in prices of 4.5 percent, with a range of two percentage points above or below that level.

The rise in rates means that credit will become more expensive, which could slow down internal consumption, the main engine of the South American giant's economy.

The Brazilian economy grew 0.6 percent during the first quarter of this year, below official and market expectations, something that forced a reduction in official and private forecasts.

The projections of private-sector economists for GDP growth this year range between 2 percent and 2.7 percent, a figure slightly below the government's most recent calculation, which is about 3 percent.




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