Brazil keeps interest rates unchanged at 14.25%

The 14.25 percent benchmark interest rate in Brazil is considered to be one of the highest rates in the world. The holding of interest rate is expected to be a fresh breather for Brazil's President Dilma Rousseff, who's been facing political turmoil.

The Central bank has also indicated that the present interest rates will be unchanged for some more time.

The 14.25 percent interest rate in the world's seventh largest economy is one of the highest among the world's top-10 economies. Central bank's monetary policy committee is known as 'Copom' has opted to keep the interest rate remain unchanged at the previous level.

The Copom has also said the monetary policy will remain vigilant in achieving the objective of bringing down the inflation rate.

Brazil is facing its worst economy recession during the past 25 years and this is posing a major challenge to President Rousseff as she's been fighting for her political survival. The central bank has also lifted off a self-imposed target of inflation rate at 4.5 percent to be achieved in 2016.

Market analysts had also forecast that there wouldn't be any change in interest rates. The holding of interest rates is vital for Brazil to curb rising inflation rate. The central bank of Brazil held a meeting for two days on interest rates.

Brazil is witnessing a surging rate of unemployment. The economy recession and the rise inthe unemployment rate have resulted in surging disenchantment with President Dilma Rousseff. The central bank has already cautioned public that recession would be more severe than expected.

All the 48 economists participated in a survey by Reuters forecast that Brazil's central bank would hold its bench market Selic rate at 14.25 percent, which is hovering at nine-year high. The ongoing worst economic situation is threatening the democracy in Brazil, which returned to it three decades ago.

Alexandre Tombini, Central bank chief, said: "The weaker currency Real is a threat to its goal of bringing inflation back to the official 4.5 percent target by late 2016." Tombini has argued that the volatile prices may be temporary. The central bank will not change its strategy of holding rates steady for a sufficiently prolonged period.

The expected inflation rate would tough 9.5 percent on an annual basis by the end of the year. The central bank expects that the inflation rate may ease in next two years till 2018. The Congress has received a new impeachment petition against President Rousseff over illegal accounting practices.

The petition has been not only supported by opposition leaders but also some of the Rousseff's Workers' Party as well. The scandal at the state-run oil major Petrobras has also impacted the government's image in a more negative way.