Brazil's central bank raised its key interest rate by a further 50 basis points to 13.75 percent, the highest level since December 2008, due to the "macroeconomic scenario and the outlook for inflation."
The Central Bank of Brazil has now raised its benchmark Selic rate by 200 basis points this year alone and by 650 points since embarking on a monetary policy tightening cycle in April 2014 in a dogged attempt to force inflation down to the bank's target range of 4.5 percent, plus/minus two percentage points.
The bank's monetary policy committee, known as Copom, was unanimous in its decision and no bias was indicated.
Today's rate hike was largely expected following recent comments by central bank officials.
Last month Alexandre Tombini said the central bank would remain "vigilant" to ensure that sharp rises in government-set prices this year did not spread out into 2016 and beyond.
Tombini has also repeatedly underscored the central bank's determination to bring inflation back to midpoint of the bank's target by 2016 despite economic contraction.
A survey of economists released on June 1 showed that they had raised their forecast for the Selic rate to hit 14 percent by the end of the year and increased their outlook for consumer price inflation to 8.39 percent from 8.37 percent.
Brazil's consumer price inflation rate rose to 8.17 percent in April from 8.13 percent in March, the fourth month of accelerating inflation.
In its quarterly report from March, the central bank raised its 2015 inflation forecast to 7.9 percent from 6.1 percent previously but cut the 2016 forecast to 4.9 percent from 5.0 percent.
In 2014 Brazil's inflation rate averaged 6.3 percent and the International Monetary Fund (IMF) forecasts 7.8 percent this year. Brazil's Gross Domestic Product contracted by 0.2 percent in the first quarter of this year from the fourth quarter for a year-on-year decline of 1.6 percent, the fourth consecutive quarter of shrinking economic output.
In its latest outlook, the IMF cut its forecast for Brazil's economic growth this year to a 1.0 percent contraction from a previous forecast of 0.3 percent growth due to tighter fiscal and monetary policies and lower investments by scandal-hit, state-run oil company Petrobras.
In 2014 Brazil's economy expanded by only 0.1 percent after 2.7 percent growth in 2013.