Brazil’s central bank signaled it’s ready to boost borrowing costs early next year as higher political and economic uncertainties threaten to keep inflation above its target for longer than initially expected.
The monetary committee will adopt the necessary measures to ensure inflation “will be as close as possible to 4.5 percent in 2016” and “converges to the 4.5 percent inflation target in 2017,” policy makers said in the minutes to their Nov. 24-25 meeting. The comments were published less than 24 hours after Congress initiated impeachment proceeding against President Dilma Rousseff.
The central bank kept the key rate at a nine-year high of 14.25 percent last week as it faces a deeper-than-forecast recession and above-target inflation. Two of the eight board members dissented and voted to raise borrowing costs in a sign the central bank may tighten monetary policy early next year. The majority agreed they had time to monitor the situation until next meeting, before reassessing the need to change strategy, the minutes said.
Brazil Energy Insight 
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