21 Jan 2011

Brazilian interest rate raised

1:36 pm on 21 January 2011

The central bank in Brazil has raised its key interest rate to 11.25% from 10.75%, in a bid to cool inflation.

Inflation was 5.91% last year and is forecast to remain above 5% in 2011.

The BBC reports the bank warned that the rate rise may be just the start of a series of rises to curb inflation.

Capital inflows from outside Brazil have soared as investors flee record-low rates in more developed countries.

The strengthening of the real has hit Brazilian manufacturers hard because their exports are more expensive.

The BBC reports the economy grew more than 7% in 2010 and is expected to grow between 4.5% - 5% this year. It is the largest in Latin America.