UPDATE 3-Brazil holds rate steady for now, signals tightening ahead
* Brazil keeps benchmark Selic rate at 7.25 pct * Says to monitor macroeconomic scenario before next decision * High inflation takes priority over slow-moving recovery By Alonso Soto BRASILIA, March 6 (Reuters) - Brazil's central bank held its benchmark interest rate steady at an all-time low of 7.25 percent on Wednesday, but signaled policymakers are ready to hike rates again to rein in high inflation in Latin America's largest economy. The bank's 8-member monetary policy committee, known as Copom, voted to keep the Selic rate unchanged for the third straight time as expected by all the 56 economists surveyed by Reuters last week. Most observers rightly predicted the bank was going to remove the previous guidance of maintaining rate stability "for a sufficiently prolonged period" and flag tighter policy ahead in a bid to keep inflation in check. The central bank said in a statement that the decision was unanimous after assessing the economic and inflation outlook. "The committee will accompany the evolution of the macroeconomic scenario until its next meeting, when it will define the next steps in its monetary policy strategy," the bank said in the statement. Bets on a higher Selic started to grow in February when central bank chief Alexandre Tombini said he was "uncomfortable" with current inflation levels and that the bank will not hesitate to raise rates. Inflation is moving closer to the 6.5 percent ceiling of the official target range, raising concerns that price pressures could not only undermine the recovery, but also the re-election chances of President Dilma Rousseff next year. An increase in wholesale diesel prices announced late on Tuesday by state-run oil company Petrobras added pressure on the central bank to show a firmer stance to battle inflation. The 5 percent hike in diesel prices could result in an indirect impact of as much as 0.16 percentage point this year on inflation, according to Banco Bradesco. "The (bank) showed it will be what we call 'data dependent.' The next decision will be fully conditioned to data," said Mauricio Molan, chief economist with Santander. "Our view is that the bank will not raise rates, but for that to happen the bank needs to receive good news about inflation from now until the next meeting." The last time the central bank raised rates was in July of 2011 when authorities worried the economy was overheating. Since then the Brazilian economy has taken a turn for the worse, posting meager 0.9 percent growth last year a despite barrage of government stimulus measures to revive activity.
- Man called Bitcoin's father denies ties, leads LA car chase
- Apple loses bid for U.S. ban on Samsung smartphone sales
- Florida mayor fights backyard gun ranges in 'Gunshine State'
- Putin rebuffs Obama as Ukraine crisis escalates |
- UPDATE 6-Obama warns on Crimea, orders sanctions over Russian moves in Ukraine