"We are witnessing the strangulation of the national economy," the Sao Paulo state Federation of Commerce said in a statement Wednesday. It blamed the inflation spike on the United States and its ultra-easy monetary policy. Brazil's government says it expects the economy to cool to a more-manageable 4.5-5.0 percent this year, after shooting up an estimated 7.5 percent last year that strained its saturated infrastructure beyond capacity. Economists stressed that, in the short term at least; Brazil's very high interest rates would do little to dampen the ardour of foreign investors." The rise of the interest rate in relation to other countries in the world attracts capital that won't go to direct investment but rather to fixed-income funds with big returns, and the stock market, and that will have short-term effects on the exchange rate," Barbosa said.

Foreign investment in Brazilian stocks and bonds last year already hit a record $52 billion.