Brazil's central bank on Wednesday increased its key interest rate by 3 percentage points to 25 per cent in an effort to crush growing inflation as the government-elect pledged to press ahead with central bank reforms and austerity measures.
It is the third consecutive rise in as many months, totalling 7 percentage points, as the central bank has sought to combat the economic woes that wrought down the outgoing government.
The increase to the overnight lending rate was larger than expected but welcomed by much of the financial market, even though it puts a further brake on an already weak economy.
"It was a necessary move to curb price increases," said Gustavo Loyola, a leading financial consultant.
An increase in inflation to an expected 12 to 13 per cent this year and next due to a massive currency depreciation has become one of the main investor concerns.
