Brazil’s basic interest rate, the Selic, which, at 8.5% for the last 45 days, was already at a historical low, was lowered further this Wednesday (July 11), when the Brazilian Central Bank’s Monetary Policy Committee (Copom) voted unanimously to reduce it another 0.5 percentage points to 8% per year.
This was the eighth consecutive meeting in a series that began in August 2011, where Copom lowered the Selic (Copom meets every 45 days). During that time, Copom has lowered the Selic 4.5 percentage points, that is, from 12.5% to 8%.
Or, to put it another way, reduced the Brazilian benchmark interest rate by 36%. Needless to say, banking industry interest rate reductions lag slightly behind the Selic.
In fact, according to a Consumer Foundation poll in São Paulo (Pesquisa da Fundação Procon de São Paulo), interest on a bank loan will cost you more than the Selic in a month.
Procon found that the average interest on an overdrawn checking account (“cheque especial”) was 8.36% per month.
In an explanatory note on its decision to lower the Selic, Copom said it considered inflation risks limited domestically and saw deflation abroad due to the fragile global economy.
The vast majority of financial analysts expected the 0.5 percentage point reduction, although there were some, as reported in the Central Bank’s weekly market survey, Focus, who betted on an even bolder reduction of 0.75 percentage points because of weak inflationary pressure and sluggish economic activity.
The next Copom meeting is scheduled for the end of August.
Brazil’s minister of Finance, Guido Mantega, and the United States Secretary of Homeland Security, Janet Napolitano, signed a joint declaration that will permit an exchange program to be established for technology, information and training of personnel working in customs (“Receita Federal”) as part of a Global Supply Chain Security effort by both countries.
According to Luis Felipe Barros, acting deputy secretary for Customs and International Affairs, the document will make it possible for both countries to expedite so-called low-risk cargo while concentrating time and effort on high-risk cargo.
“If only 10% to 15% of the containers we handle have to undergo careful inspection, then the rest can move more quickly through customs in both countries,” explained Flávio Araújo, coordinator general of International Relations at Receita Federal, who went on to explain that nowadays imported cargo takes an average of two days to be liberated by customs. Exports can move through in ten hours.
In a pilot program, to be set up as part of the Global Supply Chain Security pact, authorized operators for certain importers, exporters and transporters at specific airports in Brazil and the United States (one in each country) will streamline customs operations. However, at the moment, the program is still just on paper.
Brazil is also negotiating a similar agreement with South Korea.
Barros declared that an exchange of information between the two selected airports would be initially limited to commercial cargo, but that in the future could be expanded to include passengers and their baggage.
“Bags would be scanned beforehand making it possible for detailed inspection to concentrate on suspicious baggage instead of being based on samples,” he explained.
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