Inflation Fears Made Brazil Do It

Brazil Central Bank’s Monetary Policy Committee (Copom) decided unanimously to raise the annualized benchmark interest rate (Selic) by 0.50%, from 16.25% to 16.75%.

After the meeting, the Committee released the following justification:


“Proceeding with the process begun at September’s meeting of moderate adjustment of the benchmark interest rate, the Copom decided unanimously to raise the Selic rate to an annualized 16.75%, without bias.”


This is the second straight month in which the Central Bank has raised the rate, which had remained stable at 16% since April. In September the rate was hiked by 0.25%.


The Selic is the interest rate the government agrees to pay for the money it borrows from domestic sources. The rate is determined monthly by the Copom.


In calculating the Selic, the Copom takes into account various factors, among them the prospects for future inflation (over the next 30 days) and temporary upward or downward price trends in the economy (past inflation).


International economic conditions are also considered; for example, whether there is an excess or scarcity of money on the international market (international liquidity).


The Minister of Planning, Guido Mantega, said that the 0.50% hike in the Selic interest rate was necessary, because there was a slight growth in inflation.


The Minister explained, however, that this increase was merely nominal and that the real interest rate remains stable.


“Nobody likes an increase, but it was a precautionary step,” he affirmed.


Mantega pointed out that the cost of credit for some sectors has fallen as a result of government programs.


He cited, for example, the credit offered by the National Economic and Social Development Bank (BNDES) to micro, small, and medium-sized entrepreneurs at an average rate of 1.4%.


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Your email address will not be published.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

Brazil and Mercosur Shooting for a 2006 Trade Agreement with EU

A top official in the European Union says she hopes the Biregional Association Agreement ...

Brazil Presents First Plan Under Kyoto Protocol Guidelines

On the day when the crucial ratification for the entry into force of the ...

Americans in Brazil, Come November You Have the Right to Vote!

While the US general elections only happen on November 7, it’s time for the ...

Brazil’s International Organic Fair Exceeds Expectations

The BioFach América Latina 2004, the continent’s biggest organic product fair, ended on Friday ...

With an Eye to the US, Brazil’s Lula Releases Reelection Platform in English

The Brazilian ruling party, the PT (Workers Party), has published a summary in English ...

Chavez Withdraws Ultimatum to Brazil While Waiting to Get into Mercosur

Venezuelan President, Hugo Chávez, warned on Wednesday that if Venezuela's entry into Mercosur is ...

Brazil Holds Series of Raids to Embarrass Foreign Whore-Chasing Tourist

For this week, Brazil’s Federal Police in the northeastern city of Natal, capital of ...

A Map to Lower Brazil’s Interest Rates from 19.5% to 4%

One of the goals established in the Strategic Map of Industry, released Tuesday, April ...

Brazil Slashes 1/4 of Its Defense Budget

It’s the intention of the Brazilian government to cut US$ 4.2 billion Brazilian reais ...

Back on Earth Brazil’s First Astronaut Pays Tribute to Dumont

Lt Col Marcos Pontes, the first Brazilian to go into space, has returned to ...