Brazil Cuts Interest Rates for 14th Time in a Row, to 12.75%

Brazilian currency, the real

Brazilian currency, the real Brazil's Central Bank on Wednesday, March 7, cut the basic reference interest rate Selic by 25 points to 12.75%, in line with market expectations and government promises of a more flexible monetary policy.

The Monetary Policy Committee, Copom, said in a release that the decision was "unanimous" and the reduction is on target with a more flexible monetary policy process.

This was the fourteenth consecutive cut since the Central Bank begun to relax its tight approach to monetary policy in September 2005.

Market analysts anticipate that the Central Bank will continue with its policy of gradually cutting interest rates, which are among the highest in the world given the fact that inflation in Brazil has averaged 4.5 to 5.5% during the first four years of President Lula.

Copom is scheduled to meet again in mid April.

The loosening of monetary policy was an implicit promise of Lula for his second four-year mandate with the purpose of spurring the economy which since 2002 has grown at 2.6% annually, trailing the rest of Latinamerica.

In the first four years of Lula's administration an extremely orthodox monetary approach to combat inflation, appreciate the Brazilian currency and improve the debt/GDP ratio had a constricting impact in the country's growth in spite of record exports pushed by the global commodities boom.

For his second mandate the Brazilian president announced a gigantic public works investment plan, to be matched by the private sector, to ensure the Brazilian economy averages an expansion of at least 4.5% annually.


  • Show Comments (1)

  • CH.C.

    Despite 14 interests rates cuts, Brazil has still the World Highest Interests Rates……After Inflation !!!
    Despite 14 interests rates cuts, Brazil has still the Lowest Economic Growth Rate of ALL developing nations, of their famous BRIC club, and of
    ALL Latam/Caribeans countries…..after HaÀƒ¯ti and San Salvador !!!

    Incredible….but sadly true !

    Could be that by chance only you will grow again by around 3,5 %… year only !

Your email address will not be published.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.


You May Also Like

Brazil Starts Talks on Converting Its US$ 202 Billion Foreign Debt

In July Brazil will begin negotiations with creditor nations to convert part of its ...

Brazil Afraid Senegalese Immigrants Might Bring Ebola

The state government of Acre in northern Brazil has urged Brazilian federal authorities to ...

Brazil Opposition Blames Government for Robbing Petrobras to Stay in Power

A jailed former executive at state-controlled oil multinational Petrobras Paulo Roberto Costa has reportedly ...

A First in 10 Months: Brazil Leaves Interest Rates Alone

Brazil’s basic interest rate (known as the Selic), has risen steadily since September of ...

Discrimination and Neglect at Root of Suicide Epidemic Among Brazil’s Indians

Violence against indigenous peoples in Brazil is a frequent subject in the studies and ...

New Election Law in Brazil Bans T-Shirts Giveaway and Use of Celebrities

The Brazilian Senate made further changes Wednesday, April 19, in Brazil’s electoral legislation. However, ...

Brazil President Urges Obama to Take Swift Action to Alleviate US Crisis

American president-elect Barack Obama needs to act swiftly to solve the economic crisis, said ...

Brazil to Break AIDS Drugs Patent? ‘All Bluff.’

Brazil’s executive president of the Pharmaceutical Industry Association (Interfarma), Gabriel Tannus, says that Brazil ...

Neither FTAA Nor EU. WTO Is Brazil’s Only Hope.

Brazil’s Minister of Foreign Relations, Celso Amorim, met with other South American Foreign Ministers ...