By Jeffrey T. Lewis and Luciana Magalhães

SÃO PAULO--Brazil's central bank raised its benchmark lending rate and signaled another increase at its next policy meeting in August as consumer prices continue to rise rapidly and the economy shows unexpected strength.

The bank on Wednesday raised the Selic by 75 basis points to 4.25%, as expected, the third consecutive increase of that size this year. The Selic started the year at a record low of 2% and the bank left it there at its first policy meeting of 2021 in January.

The bank's monetary committee said in the post-meeting statement that its baseline scenario "indicates, as appropriate, a normalization of the policy rate to a level considered neutral," adding that "this adjustment is necessary to mitigate the dissemination of the temporary shocks to inflation."

Write to Jeffrey T. Lewis at jeffrey.lewis@wsj.com and Luciana Magalhães at luciana.magalhães@wsj.com

(END) Dow Jones Newswires

June 16, 2021 18:11 ET (22:11 GMT)