Brazil’s central bank said annual inflation will run above the tolerance range for the next six months, as food prices rise significantly and services costs remain elevated despite aggressive interest rate hikes.

Brazil's central bank on Tuesday labeled the unanchoring of inflation expectations and the country's overheating economy as "highly relevant" inflationary risks, adding that concerns over potential pressures from a weaker currency persist.

The bank’s monetary policy committee increased the benchmark rate by a full percentage point to 13.25%.

Brazil's central bank on Wednesday hiked its key interest rate to 13.25 percent in more bad news for leftist President Luiz Inacio Lula da Silva's government, which is struggling to

Brazil's central bank on Tuesday stressed that cooling economic activity is crucial for bringing inflation to target, while labeling the unanchoring of inflation expectations and an overheating economy as "highly relevant" inflationary risks.

Brazil’s central bank is likely to keep raising interest rates and take the Selic benchmark rate to 15% this year, according to the median forecast in the bank’s weekly survey of analysts.