Brazil's central bank raised its benchmark Selic interest rate by another 50 basis points to 12.75 percent, a move that was expected following a rise in inflation and further weakening of the real's exchange rate.
In a brief statement by the Central Bank of Brazil's monetary policy committee, known as Copom, the bank said the policy decision was unanimous and no bias was indicated.
The central bank has now raised its policy rate by 100 basis points this year alone and by 550 points since embarking on a tightening cycle in April 2013 in an effort to force stubbornly high inflation back to the bank's target of 4.5 percent, plus/minus 2 percentage points.
Brazil's consumer price inflation rate jumped to 7.14 percent in January from 6.41 percent in December and through mid-February the rolling 12-month mid-month IPCA index was up 7.36 percent from 6.69 percent in mid-January due to higher transportation, education and housing costs.
Brazil's real weakened further after the bank's decision to raise its rate, hitting 2.98 to the U.S. dollar from 2.93, and is now down almost 11 percent this year against the dollar. Since September last year when the real started to fall, it is down 25 percent.
On Feb. 10 central bank Director Luiz Awazu Pereira da Silva told reporters that policy makers must remain especially vigilant to prevent consumer price pressures from spreading and moving further away from the central bank's target of getting inflation back to 4.5 percent by December 2016.