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Brazil keeping rates on hold at 11% in spite of continuing inflation issues

SAO PAULO -- Brazil's central bank unanimously agreed to hold its key interest rate steady at 11 percent Wednesday, despite inflationary pressures.

Traders had forecast no change prior to the decision by the central bank's monetary policy commission (Copom) after a two-day meeting.

June saw a 0.4 percentage points rise which took the headline 12-month rate to 6.52 percent, above an official target ceiling of 6.5 in South America's largest economy.

Copom said the decision had been taken after “evaluating the macroeconomic outlook and inflation perspectives.”

Economist Manuel Enrmquez Garcma, from Sao Paulo University's Economics Faculty indicated that the bank “does not know what to do faced with low economic growth and rising inflation.”

“The central bank faces a large dilemma: It either acts on inflation or else prejudices economic growth” if it were to raise rates, he told AFP.

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