Brazil's central bank also raised the Selic rate by 25 basis points to 12.25% at the June Copom meeting this year. Brazil reported an annual inflation rate of 6.71% in June this year, up slightly from 6.55% in May, and just out side the official inflation target of 4.50% +/-2% (2.5-6.5%). The Brazilian government is forecasting economic growth this year of 4.5-5%, compared to GDP growth of 7.5% during 2010. The "BRIC" emerging market economy grew 1.3% q/q in the March quarter, placing annual growth at 4.2%.
The Brazilian central bank also made headlines earlier this month when it announced further measures to discourage dollar shorting in order to cap a persistent rally of its currency, the Real. The central bank will require that banks with short US dollar positions hold 60% of the value of short positions greater than $1 billion in non-interest bearing deposits at the central bank. The Brazilian Real has appreciated 20% against the US dollar over the past two years.