Brazil's central bank raised its benchmark interest rate on Wednesday to 8 percent from 7.5 percent, stepping up the pace of a tightening cycle to battle high inflation as Latin America's largest economy struggles with slow growth.
The bank's monetary policy committee, known as Copom, voted unanimously to hike its Selic rate by 50 basis points. The decision followed disappointing first quarter growth that prompted markets to price in a milder 25-basis-point increase.
In a short statement, the bank said the "decision will contribute to lowering inflation and ensuring that the trend continues next year."
The bank removed previous references to "caution" in future decisions, indicating that policymakers could continue to deliver aggressive rate hikes to stem a surge in prices.
The steeper hike could help the central bank and its chief Alexandre Tombini regain some of its lost credibility to fight inflation and ease high inflation expectations that some fear could halt much-needed investment and erode consumption.
"Excellent, we welcome the move. It helps the central bank regain its credibility and anchor inflation expectations," said Alberto Ramos, economist with Goldman Sachs in New York. "Well done all across. Consistent message and unanimous decision."
Brazil is one of the few major world economies currently raising interest rates as strong demand, high production costs and infrastructure bottlenecks keep inflation closer to the upper end of an already high official target range.
Tombini had signaled he may step up the tightening cycle, dropping previous references to "cautious" rate hikes and instead adopting more incisive language, saying the central bank will "do what is necessary, in a timely manner" to slow inflation.