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Sunday 23rd of January 2011
January 20, 2011    

Brazil lifts interest rates to curb inflation

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by Kay Murchie

Brazil, which is one of the world’s fastest growing economies, has admitted that inflation is spiralling out of control.

As a result, the central bank has lifted its key interest rate half a percentage point to 11.25% in a bid to tame inflation, which at 5.91% exceeds the Government’s target of 4.5%.

The interest rate, which was the first since July last year, was also the first under President, Dilma Rousseff, and central bank chief, Alexandre Tombini, both of whom were appointed earlier this month.

Inflation is expected to remain above target throughout the year but the new president has pledged to bring the rate down.

Meanwhile, Brazil‘s economy, which is the largest in Latin America, grew more than 7% in 2010 and is forecast to expand between 4.5% and 5% in 2011.

Former President Luiz Inacio Lula da Silva, said Brazil will become the world’s fifth largest economy by 2016.

The economy appears to be bucking the trend after creating 1.3 million jobs last year – when other economies are battling with rising unemployment.

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