Brazil's central bank 'looks to rebuild credibility'

8 March 2013

Brazil's central bank has decided to take a different policy approach in a bid to rebuild its credibility.

The Financial Times reports that Banco Central do Brasil is adopting a more "hawkish tone" with regard to its monetary policy rhetoric.

Although the lender left its benchmark Selic rate at 7.25 per cent - a record low, which has been in place for three months in a row - an accompanying statement to the bank's latest monetary policy meeting indicated the door may be open for a possible increase in this rate in an effort to combat increasing levels of inflation.

The news provider explained this change in stance may suggest a rise in the rate could be introduced by Alexandre Tombini, president of the central bank, as early as April this year.

Economist with Barclays Marcelo Salomon said: "To me it was very clear, he is signalling the intention to hike is there, the decision has already been made."

By Tony Aynsley

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