Brazil Hopeful Lower Interest Rates Will Create More Jobs

At yesterday’s, January 18, presentation of the General Register of Employment and Unemployment (CAGED), the Brazilian Minister of Labor and Employment, Luiz Marinho referred to the results in 2005 as "very positive."

1.254 million new formal jobs were created over the course of the year, an increase of 5.09%.

"It was not as good as in 2004," Marinho observed. 1.523 million new formal jobs were created in 2004, more than double the total of 645,433 new formal jobs created in 2003.

Marinho also announced that the country’s employment level fell 1.10% in December, in comparison with November. According to the minister, December is usually a month of dampened economic activity, mainly in consequence of the lull between agricultural harvests, the end of the school year, and lower industrial demand.

He said that 286,719 formal jobs were eliminated in the final month of 2005. Still, this decline was less than in December, 2004, and December, 2003, when job losses amounted to 353,093 and 299,918, respectively, according to the CAGED.

The biggest reductions were in manufacturing (-103,272 jobs), agriculture (-102,685), services (-47,400), and construction (-30,338).

In the minister’s view, the slower pace of job creation in 2005 was caused by the high benchmark interest rate (SELIC), but the situation is bound to improve this year, in consequence of the process that began last September of lowering interest rates and the "resulting increase in job-generating investments that this makes possible."

17.25%, New Selic

After a meeting that lasted four hours and 46 minutes, the Brazilian Central Bank’s Monetary Policy Committee (Comitê de Polí­tica Monetária) (Copom) announced that it had unanimously decided to reduce the country’s basic interest rate (Selic) by 0.75 percentage points. Thus Brazil’s benchmark interest rate went from 18% to 17.25% per year.

The meeting was the second longest since the Luiz Inácio Lula da Silva administration took office and Henrique Meirelles became head of the Central Bank. Another meeting in February 2003 took over five hours.

Agência Brasil

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