From Yahoo Finance: 2025-03-25 09:42:00

Brazil’s central bank confirms interest rate hikes to combat high inflation, with a 1% increase to 14.25% last week. Future hikes will be smaller due to economic uncertainty, and inflation hit 1.31% in February. The bank aims to control unanchored price forecasts and prevent target breaches in 2025.

President Lula da Silva faces backlash as inflation impacts popularity. The government introduces measures to support consumption but risks further price pressure. Concerns over fiscal discipline and global geopolitical uncertainties may raise Brazil’s neutral interest rate, impacting monetary policy effectiveness. Recent data shows uneven economic activity.

Analysts predict Brazil’s economy will grow around 2% in 2025 and 1.6% in 2026, falling short of the 3.4% expansion in 2024. The central bank hints at pausing interest rate hikes to evaluate the economic slowdown but is unlikely to do so at the May meeting. Policymakers aim to navigate challenges in the face of global uncertainty.

Read more: Brazil’s Central Bank Says Its Hiking Cycle Has Room to Run