Brazil keeps rates on hold at 11%

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Brasilia - With the country battling recession and inflation a month away from a presidential election, Brazil's central bank Wednesday kept its key interest rate on hold at 11 percent.

Traders and analysts had forecast no change and the central bank's monetary policy commission (Copom) duly elected to leave well alone following its monthly two-day meeting.

“Taking into account the macroeconomic climate and inflation outlook, Copom decided unanimously to maintain the Selic rate at 11 percent,” the bank said in a statement.

After Latin America's largest economy slid into recession last week, analysts had cited the need to rein in inflation which in July crept above an official 6.5 percent ceiling, seeing little scope for a cut.

Brazil is in a fourth year of anemic growth and the 2014 forecast is for just a 0.52 percent rise in GDP.

The benchmark rate has not budged since a quarter point rise in April in what was the ninth straight monthly increase as Brazil fought against inflationary pressures.

Wednesday's decision came with a new Ibope opinion poll showing environmentalist Marina Silva as still on course to oust incumbent Dilma Rousseff in an October 26 run off.

The poll showed Workers Party (PT) candidate Rousseff with 37 percent of voter intentions for the first round on October 5 with Socialist Party (PSB) candidate Silva on 33.

But the poll also indicated Silva would win on the second ballot by 46 percent to 39 for Rousseff.

Polls last week had put Silva's lead at ten points.

The Bank in 2011 set in train a cycle of monetary expansion which took interest rates down to an historic low of 7.25 percent within a year before inflationary pressures forced a volte face now threatening Rousseff's continued tenure. - Sapa-AFP


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