Brazilian President Dilma Rousseff’s left-leaning administration is worried a possible interest rate hike next week will foil its efforts to revive a battered economy while failing to curb inflation, government sources said on Thursday.
The ruling Workers Party, unions and businesses are pressuring the central bank to keep its Selic rate BRCBMP=ECI unchanged to avoid deepening what is on track to become Brazil’s worst recession in more than a century.
The central bank has raised the rate by 700 basis points since 2013 to 14.25 percent – the highest benchmark interest rate of any major economy – but has had scant success in stemming price rises. Annual inflation surged to a 12-year high of 10.67 percent in December, more than double the official target of 4.5 percent.
Inflation expectations for this year and next continue to rise as Brazil’s currency, the real, weakens and major cities raise bus fares.
Brazil Energy Insight 
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