Brazil struggles with inflation, and expectations

Paulo Travisani – The Wall Street Journal, 7/26/2015

Brazil’s version of the Federal Reserve will almost certainly raise its benchmark Selic interest rate next week for the 16th time in just over two years in a bid to fight escalating inflation.

Trouble is, prices aren’t cooperating. Brazil’s annual inflation rate recently hit 9.25%. That is more than double the official 4.5% target and up substantially from 6.5% in April 2013, when the bank started raising rates.

That double-whammy of high rates and inflation are weighing on Latin America’s largest economy, which is contracting this year.

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