Brazil raises interest rates in surprise move

Brazil's central bank surprised financial markets yesterday with an increase of its prime lending rate by 0.5 percentage points to 25.5 per cent, showing its intention to implement tough inflation controls. Only two weeks ago central bank chief Henrique Meirelles vowed to keep a tight grip on inflation.

It was the central bank's first interest rate decision since Luiz Inacio Lula da Silva took office as president on 1 January. Analysts welcomed the increase as a sign the central bank was willing

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