The Brazilian central bank has raised its base rate by 25 basis points to 7.5%, which is less than some market analysts had expected, with some calling for a 50 basis points hike, to fight rising inflation.

Analysts say this signals a soft tightening cycle ahead, with the central bank still worried that it might hurt economic growth.

The decision ‘suggests that the tightening cycle is likely to be less aggressive than many seem to expect’, Neil Shearing, chief emerging markets economist at Capital Economics, reportedly said, adding ‘in fact, we think it will be the shortest and smallest tightening cycle in history.