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 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.

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