Brazil's central bank has raised interest rates to a six-year high of 12.75% to restrain inflation.
The bank said in a statement: "In assessing the macroeconomic scenario and the outlook for inflation, the Copom [the bank's monetary policy committee] decided unanimously to raise the rate by 0.5 percentage points, to 12.75%."
Inflation in Brazil, Latin America's largest economy, was at a 12-year high in February of 7.4%, while the government's target is 6.5%.
The country's economy had been one of the world's fastest growing, but 2014 appeared to be tough for it. For 2015, economists predict that the economy will contract by more than 0.5%.
On Wednesday, official figures showed industrial production in Brazil fell 5.2% in January compared with last year.
Brazil, once one of the fast-growing Bric economies that also
include Russia, India and China, is struggling, since demand for Brazil's
commodities slows.
The country's president, Dilma Rousseff, is trying to force through measures to cut the country's deficit by cutting spending and raising taxes, but is facing stiff political opposition.
The president of Brazil's Senate rejected an attempt to increase taxes.
On top of that, a corruption scandal at the state-owned oil giant Petrobras is adding to uncertainty and curbing the company's investment plans.
Brazil's move to raise rates goes against the global trend for rate cutting. This week, India cut interest rates and China has also been easing monetary policy to try to boost economic growth.
On Wednesday the real, Brazil's currency, fell by 2%, hitting an 11-year low at one point.
