Brazil's Central Bank's Monetary Policy Committee (Copom) announced, yesterday, its decision to raise the country's basic interest rate (known as the Selic) from 16% to 16.25%. The increase comes after the Selic remained steady at 16% for five consecutive months.

The Copom vote on the increase was not unanimous. There were five votes for the 0.25 percentage point increase, and three votes for a 0.50 percentage point increase.

According to a note from Copom, the increase is the beginning of a process of moderate adjustments to the country's basic interest rate so as to ensure that inflation does not hinder the recovery of real wages or sustained economic growth.

Still on the economic front it was announced that the São Paulo industrial sector, where 40% of all Brazilian productive activity takes place, grew 17% in July, compared to July 2003. Industrial growth for the year is running at 11.2%, and 6.8% for the last 12 months.

According to the IBGE, Brazil's government statistical bureau's monthly survey, the July performance was boosted by growth in 17 out of 20 segments, with electronic material and equipment leading with growth of 182%, and vehicles up 35.4%.

The segments where they was a decline in activity were pharmaceuticals, petroleum refining and alcohol production, and printing.

Agência Brasil

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