^{Thursday 10th June 2010}

Brazil’s central bank has raised interest rates by 0.75% as the country’s continuing high growth is causing some concern over rising prices.

The South American country expanded by 2.7% this quarter compared to last quarter and 9% on the same period in 2009. This is a much faster rate than experts expected which was between 4.5% - 5%.

The bank raised its target overnight Selic rate to 10.25%, the second 0.75% increase at the last two meetings of its monetary policy committee. Consumer price inflation ballooned from a low of 4.17% a year last October to 5.22% in the 12 months to May. Many economists expect inflation to reach 6% this year which is well above the government’s target of 4.5%. In addition, economic growth is expected to be about 6.6% this year.

It is expected that interest rates will rise to about 11.75 by the end of 2010.

If you are interested in learning more about investing in emerging market such as Brazil, find out more in our Investing in Emerging Markets guide, or you can contact us to talk to somebody.