Brazil Keeps Selic Unchanged

As widely expected, Brazil’s central bank left its monetary policy rate unchanged at 8.75%. The bank says the decision was unanimous. Goldman Sachs believes the bank will start raising rates by 50bp in April, followed by three hikes of 75bp per meeting, and two last hikes of 50bp each. This would raise the rate to 12.50% by December 2010. Bank of America Merrill Lynch, meanwhile, says it does not take a rate hike in 2010 for granted and expects it to remain at 8.75%, although it notes there are risks to the upside, particularly in the second half.