• Categories
  • Archives

Brazil Industry Applauds Lower Interest Rates, Now They Want Other Changes

Brazil's Central Bank Last week, the Brazilian Central Bank’s Copom (Monetary Policy Committee) cut the Brazil’s benchmark interest rate, the Selic, by 0.75 percentage points for the second consecutive time, lowering it to 9% per year. The decision was unanimous.

Copom has now reduced the Selic six consecutive times since last August when it was 12.50%.

Market surveys have found that most financial analysts see the Selic at 9% at the end of the year. Wednesday’s decision will give Copom plenty of time to see if they can keep the interest rate stable for the rest of the year while dealing with domestic inflationary pressure and threats from the international economic situation.

The labor union, Força Sindical, called the Copom’s decision “timid.”

“As we see it, this lowering the interest rate by eye-dropper means a lost opportunity for the Central Bank to make a drastic reduction that would create jobs and increase production,” said a note signed by the Força Sindical president, Paulo Pereira da Silva.

According to the note, interest at 9% continues to hinders economic expansion. “Fewer jobs are being created and industrial production has worsened over the last few months,” concluded the note.

The National Industrial Confederation (CNI) released a note saying that the decision was correct.

According to CNI, persistently falling inflation and stagnation in the industrial sector leave room for more active monetary policy

Copom has been almost aggressive, reducing the Selic from 10.50% in the last 90 days; that is, by 0.75 percentage points in its last two consecutive meetings.

The CNI says that, in its opinion, inflation this year should come in near the government’s target of 4.5%, plus or minus two percentage points and that means there is room for an attack on bank spreads.

Lower spreads, declared the CNI, will enable “…the cost of capital to be less punishing to the productive chain.”

The Industrial Federation of the state of Rio de Janeiro (Firjan) said the decision by Copom to reduce the Selic by 0.75 percentage points was “not a surprise,” with economic activity sluggish and inflation under control.

The environment is ripe for a reduction of interest rates, said the organization in a note.

But Firjan went on to say that the Selic reduction should be accompanied by institutional reforms that permit a lasting reduction of production costs and increased productivity.

Firjan pointed out that it supports bills in Congress to eliminate fines on employers who fire workers and end cascading taxation on the supply chain, specifically industrialized goods.

Following the announcement of the Copom’s decision the São Paulo Industrial Federation (Fiesp) said the measure should include a reduction in the cost of bank loans.

“The Central Bank has been reducing interest rates for six months. It is time for banks to lower interest rates on loans to individuals and corporations. There must be a credit stimulus in order to sustain economic growth and the creation of jobs in Brazil,” declared Paulo Skaf, the Fiesp president in a note.

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

Brazil Tells Colombia About Its Concern Over US Forces in that Country

Colombia's president Alvaro Uribe three day visit to seven South American countries to explain ...

Brazilian Senate Urged to Approve Global Anti-Tobacco Accord

The Brazilian Clinical Oncology Society (SBOC), the São Paulo regional chapter of the SBOC, ...

Brazil on the Verge of Becoming World’s Largest Food Supplier

The Brazilian food industry is doing well. As well as the country currently being ...

Brazil Wants to Get Credits for Keeping Forests Intact

On Friday, March 24, the fifth day of the 8th Conference of the Parties ...

Orson Welles’ Youth’s Folly in Brazil

The story that so much interested filmmaker Orson Welles, was the tale of four ...

Energy Crisis: After Brazilians Visit Venezuela Sends Its Technicians to Brazil

Venezuela is sending its technicians to Brazil to examine the energy grid, especially how ...

Imports by Brazil of Graphic Arts Products Grow 41%

Brazil imported the equivalent to US$ 178.4 million in graphic arts products in the ...

Brazil Is World’s 14th in GDP and 86th in Per Capita Income

On the latest World Bank annual list of the world’s economies, Brazil moved up ...

Brazil Expecting a US$ 43 Billion Surplus for 2005

Brazil’s current account balance was up US$ 911 million in the month of October, ...

RAPIDINHAS

By Brazzil Magazine The capital of the state of Goiás, Goiânia is 200 km ...