Brazil's benchmark rate at current level for 'time long enough'

According to the minutes of its monetary policy committee meeting (Copom), Brazil's central bank does not foresee a new benchmark rate hike for the rest of the year.

The minutes of the meeting divulged Thursday, in which Copom decided on a 50 basis points hike to the benchmark Selic rate to 14.25%, did not include, as in previous meetings, the phrase "the progress in the battle against inflation is still not enough" and concluded that maintaining the rate at 14.25% for "a time long enough" is necessary for the convergence of inflation to the target by the end of 2016.

The change in wording reinforced the belief of market observers that the central bank does not plan another hike this year, according to local media outlet O Globo.

High inflation in Brazil, according to the central bank, is the result mainly of two major price adjustment processes going on in the economy: realignment of local to international prices – a consequence of the depreciation of the real – and the realignment of local managed prices with free determined prices, a consequence, for instance, of the increase in energy costs.

Annual inflation in June reached 8.89%, the highest since 2003. Market analysts expect annual inflation to reach 9.25% in 2015, 25 basis points above the central bank's estimation.

Pictured is Alexandre Tombini, Brazil's central bank governor.