The central bank of Brazil faces a tough task getting its economy back on an even keel, experts told CNBC, after the country's main interest rates were raised for the fifth month in a row Wednesday.
Brazil's central bank raised interest rates to 9.5 percent from 9.0 percent in an attempt to fight above-target inflation of 5.86 percent. The move follows the announcement in August that it would launch a $60 billion intervention program to stem the Brazilian real's slide in value and rising import costs.
However, the hike in interest rates to mitigate the negative impact of inflation comes against a backdrop of slowing growth.
The country's gross domestic product (GDP) growth has slowed from 7.5 percent in 2010 -- when the economy was largely fueled by foreign investments, a credit boom and rising consumption -- to a predicted 2.5 percent in both 2013 and 2014, according to figures this week from the International Monetary Fund (IMF).
Adding insult to injury, the IMF said in its latest economic report this week that Brazil would suffer the lowest growth among its fellow emerging market economies, Russia, India and China.
Despite the slowdown, tackling inflation remained the central bank's key priority, Luis Costa, Emerging Market strategist at Citi, told CNBC. "The central bank is now clearly trying to fight this battle, trying to regain confidence and re-assert itself and show that it can bring inflation back to the target," Costa told CNBC Europe's "Squawk Box" on Thursday.
"But Brazil still has a serious problem of supply of infrastructure just like other EM (emerging markets) countries. Too much credit was pumped into the system towards the household sector but not towards the productive -- or potentially productive -- sectors of the economy," he added.
Costa said Brazil's infrastructure remained "extremely poor," a charge that reflects greater international anxiety about the country's ability to hold the soccer World Cup in 2014 and Olympic Games in 2016.
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Brazil's ambassador to the U.K., Roberto Jaguaribe, denied that his country was ill-prepared for the events, however, saying that the majority of spending to host the games was being plowed into infrastructure projects which would in turn bolster growth.
"They have accelerated investments in infrastructure that was required, especially in transportation, airports and ports and there is also the investments in the stadia. Seventy-five percent of the cost of the World Cup is really infrastructure investment so that helps growth as well, " he told CNBC.