Brazil hikes key lending rate by 0.5%

Brazil's Central Bank hiked its key lending rate by 0.5 percent -- to 8.5 percent -- against a background of rising inflation and anemic economic growth. "This is a strong sign that the central bank is concerned by inflation," said Felipe Queiroz, an analyst at Brazil's Austin Rating. The Central Bank had already lifted its key interest rate twice this year -- by 0.25 points in April and by another 0.50 points in May -- after no increases since July 2011. Last month, 12-month inflation reached 6.7 percent, above the 6.5 percent upper limit of the official target. Meanwhile, in late June, the Central Bank lowered its GDP growth forecast for this year to 2.7 percent, from 3.1 percent, and projected higher inflation of 6.0 percent, compared with 4.5 percent early this year. President DIlma Rousseff's government is trying hard to prod on the pace of growth, a bit more than a year before October 2014 elections.