As expected, Brazil's central bank increased the country's policy rate to 10.75%. This comes as inflationary pressures have risen in recent months. Consumer price inflation was reported at 5.91% in December. The central bank's inflation target is 4.5%. Below is a chart of Brazilian consumer price inflation and the target federal funds rate over the past two years, through December 2010.
Source: Banco Central do Brasil
Just to check in on Brazilian equities, below is a chart of the Brazilian ETF EWZ.
Inflationary pressures should continue to be a headwind for Brazilian companies, along with China's own tightening of monetary policy.
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