Brazil watches Fed rate hike

While the USA Federal Reserve makes the second rate hike decision of the year, global central banks continue their tightening policies in the face of this decision.

One of these banks was the Central Bank of Brazil. The bank increased the Selic rate, which is the policy rate, to 12.75 percent with an increase of 1 percentage point. Thus, the bank's interest rate increase since last year reached 10.75 points.

The expectation of economists was that the bank would raise the policy rate to 12.75 percent.

Continuing with its tightening policy, the Brazilian Central Bank signaled an interest rate hike for the next meeting. In the text of the decision, it was emphasized that the bank will continue its strategy until the disinflation process is strengthened and inflation expectations are anchored.

Second rate hike from Fed
The US Federal Reserve increased the policy rate by 50 basis points at its May meeting, as expected. This was the highest rate increase since 2000. It was stated that the balance sheet will be reduced by 47.5 billion dollars per month as of June 1, and a monthly decrease of 95 billion dollars in the next 3 months. The text reads, “We are very cautious about inflation risks”.

Speaking after the decision, Fed Chairman Jerome Powell stated that he addressed the US people directly and emphasized the Fed's role in reducing inflation. Powell said that a 75 basis point rate hike was not something they were actively considering.