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Brazil raises interest rates 100 bps, forecasts smaller hike ahead

BY Reuters | ECONOMIC | 03/19/25 05:47 PM EDT

BRASILIA, March 19 (Reuters) - Brazil's central bank raised interest rates by 100 basis points on Wednesday for the third consecutive time, sticking to previous guidance, and signaled a smaller rate hike at its next policy meeting as it monitors signs of an economic slowdown.

The bank's rate-setting committee, known as Copom, lifted the Selic rate to 14.25% - a level last seen in 2016 - in a unanimous decision, in line with the expectations of all 37 economists polled by Reuters. (Reporting by Marcela Ayres Editing by Brad Haynes)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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