UPDATE 3-Brazil hikes key rate again as central bank holds cards close

miércoles 21 de enero de 2015 19:28 GYT

(Adds finance minister, analyst comments)

By Alonso Soto

BRASILIA Jan 21 (Reuters) - Brazil hiked interest rates on Wednesday to maintain its aggressive pace of monetary tightening, leaving the door open for more rate hikes in an effort to arrest high inflation and regain the trust of investors.

In a widely expected move, the central bank's eight-member monetary policy committee, known as Copom, voted unanimously to raise its benchmark Selic rate for the second straight meeting by 50 basis points to 12.25 percent, its highest level since August 2011.

The tightening cycle that began shortly after President Dilma Rousseff won re-election in October is at the forefront of a bold policy shift to rebuild the country's fundamentals at a time of great uncertainty for emerging market economies.

In an unusually terse statement, the central bank did not give any hints of what it will do next.

"Considering the macroeconomic outlook and perspectives for inflation, Copom decided unanimously to raise the Selic rate by 0.50 percentage point," said the bank, dropping language seen in its previous statement on Dec. 3 indicating that future tightening steps would be taken with "parsimony."

During her first four years in office, Rousseff promised to bring some of the world's highest interest rates down to single digits and keep them there.

However, a widening fiscal gap and the rapid pace of inflation has forced Brazil's central bank to row against the current tide of monetary easing seen everywhere from Canada to Peru as the global economy staggers along.   Continuación...