Brazil to keep raising interest rate in 2013

Brazil's Central Bank has said it would continue raising the basic interest rate this year.

It was stipulated in a document issued at last week's Monetary Policy Committee (Copom) meeting, when the rate was raised from 8 percent to 8.5 percent, reported Xinhua.

The decision was based on persistent inflationary tendencies that even led the central bank to adjust its inflation forecast for next year.

"Copom stresses that, in moments such as this, the monetary policy should remain especially vigilant, in order to minimize the risks of high levels of inflation, such as those observed in the past 12 months," the document said.

Despite a recent decrease, accumulated inflation over the last 12 months reached 6.7 percent in June, the highest since October 2011.

Most analysts believe that it should lose strength, but the end-of-year inflation is estimated to be at 5.8 percent, just below last year's figure of 5.84 percent.

Copom said a "significant risk" for inflation lies "in the possibility of wage-increase concessions that are incompatible with productivity growth".

Financial analysts expect to see two new increases in the basic interest rate by the end of the year.