High interest rates: 3 major effects of rate hikes in Brazil and worldwide

  • Cecilia Barria
  • BBC News World

woman with credit card

Credit, Getty Images

photo caption,

Rapid rise in the cost of money started in Latin America and then spread to the rest of the world

With rampant inflation sweeping the world, central banks around the world are raising interest rates.

In Brazil, it is no different. Last Wednesday (4/5), in a unanimous decision, the Central Bank raised the Selic, the basic interest rate, by one percentage point, from 11.75% per year to 12.75% per year. It is the tenth increase in a row, and the upward trajectory started in March of last year.

To try to control the rise in prices, countries in different regions of the planet have been increasing the cost of money, which, in practice, translates into more expensive credit.

So, with very high rates, nobody is interested in getting into debt.

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