Brazil's central bank raised its benchmark Selic rate by another 50 basis points to 8.50 percent, as expected, to help bring inflation under control.
It is the third consecutive rate rise by the Central Bank of Brazil, which has now raised rates by a total of 125 basis points this year. Last year the central bank cut rates by 375 basis points as economic growth fell.
The decision by the central bank's monetary committee, known as Copom, was unanimous and the decision was not accompanied by a bias toward its next move.
"The Committee considers that this decision will contribute to bringing inflation toward a decline and ensure that this trend will continue next year,"the central bank said in a brief statement.
Brazil's inflation rate rose to 6.7 percent in June from 6.5 percent, above the central bank's target of 4.5 percent, plus/minus two percentage points.
The central bank has forecast inflation of 5.7 percent this year and 5.3 percent in 2014.
Brazil's Gross Domestic Product rose by only 0.6 percent in the first quarter from the fourth quarter for annual growth of 1.9 percent, up from 1.4 percent in the previous quarter.