Brazil Cuts Interest Rates by 0.5%. Largest Reduction in 2 Years.

    Brazil’s Monetary Policy Committee (Copom) of the Central Bank (BC) decided Wednesday, October 19, to lower the annualized benchmark interest rate (Selic) to 19%. The Selic is used by banks as a reference for determining the interest they charge. The reduction, from 19.5% to 19%, is the largest since 2003.

    For a year the BC had been following a cautious monetary policy, with gradual monthly hikes in the rate. In September, 2004, the Copom, perceiving the threat of inflation, decided to raise the rate from 16%, where it had stood since April of that year, to 16.25%. According to projections made at the time, inflation was expected to overshoot the targets of 5.5% for 2004 and 4.5% for 2005.

    Based on this prospect, the rate was raised again in October, by 0.25%. In both November and December, months in which consumption rises, due to Christmas shopping, the rate was lifted 0.5%, ending the year at 17.75%.

    Between January and March of this year, the monthly increases continued in steps of 0.5%. In April the Copom concluded that the policy of raising interest rates as a way to combat inflation was producing results and decided to slow the pace, adding 0.25% to the rate, which rose to 19.5%.

    Another 0.25% was added in May, and the rate remained at 19.75% until August. Last month, one year after the BC began its policy to force a retreat in inflation, the decision was made to embark upon a new course, this time through reductions in the Selic, which was lowered to 19.5% in September.

    Agência Brasil

    Tags:

    • Show Comments (0)

    Your email address will not be published. Required fields are marked *

    comment *

    • name *

    • email *

    • website *

    This site uses Akismet to reduce spam. Learn how your comment data is processed.

    Ads

    You May Also Like

    Brazilian Petrobras oil production

    Oil and Gas Production Drops in Brazil. Still 2.1 Million Barrels a Day

    Petrobras, Brazil's government-controlled oil multinational, increased oil and gas production an average 1.4% during ...

    China Is Third Largest Importer of Brazil’s Farm Products

    China licensed 14 new poultry producing establishments from Brazil to become their suppliers. With ...

    Brazilian soy

    Arabs Replace US and Argentina by Brazil as Main Soy Supplier

    In April, Brazil posted revenues of US$ 26.1 million from exports of soybean to ...

    Lula holds oil can in Petrobras

    Brazil Petrobras’s Deep-Sea Perilous Games with Treasury Funds

    The Brazilian authorities have portrayed a complex issue of huge significance as a simplistic ...

    Organic Farmers from Brazil Show Their Stuff at Nuremberg’s Biofach

    The Biofach, the world largest international fair for organic products, gets underway this Thursday, ...

    Brazil's Defense Minister, Waldir Pires

    Latest Casualty of Brazil’s Air Tragedy: the Defense Minister

    It took three full days since Brazil's deadliest air accident for the Brazilian President ...

    Brazil’s House Committee to Ask for Expulsion of 18 Congressmen

    The first preliminary report from Brazil’s Post Office CPI – Comissão Parlamentar Mista de ...

    Unilateral Combat of Terror Not Enough, Says Syrian Leader in Brazil

    At the Second Plenary Meeting of Heads of State and Government at the South ...

    Elections in Brazil: Time for Wheeling and Dealing

    Twenty-one states had completed their vote counts by 1.30 yesterday afternoon, but that didn’t ...