President of the Central Bank of Brazil, Roberto Campos Neto, gestures during a solemn session at the Federal Senate in honor of the 130th anniversary of the Federal Audit Court at the National Congress in Brasilia, on February 15, 2023. (Photo by Sergio Lima / AFP)
Rio de Janeiro, Brazil — Brazil’s central bank left its benchmark interest rate unchanged Wednesday at 10.5 percent, opting for caution after forecasts of higher inflation in Latin America’s largest economy.
The bank’s monetary policy committee said it was acting unanimously due to “an uncertain global scenario,” with a robust Brazilian economy seeing higher price rises projected.
These factors, it said, require “diligent monitoring and even more caution.”
The decision marked the second consecutive meeting in which the interest rate was left unchanged.
READ: Brazil economy picks up as shoppers spend more
Brazilian President Luiz Inacio Lula da Silva, who has pushed for lower interest rates since coming back into power in 2023, has publicly criticized Brazil’s central bank president Roberto Campos Neto, saying he “works to harm the country.”
A lack of market confidence in the ability of Lula’s government to meet fiscal targets was cited as contributing to the decision.
Brazil’s benchmark interest rate is among the world’s highest in real terms, after aggressive increases to counter spiraling inflation following the Covid-19 pandemic and Russia’s invasion of Ukraine.
The high-interest policy, deployed to curb rising prices, makes credit more expensive and discourages consumption and investment.