Brazilian Interest Rate Down Again

The Brazilian ‘Selic’ rate has been reduced again. This is the basic interest rate set by the country’s Central Bank from time to time, which provides an important foundation for the whole economy. This latest cut (of an extra half a percent) is the fourth one in a row and it brings the new national level down to ten point five percentage points. The implications for both domestic and international investment are important as. among other things, borrowing will of course be cheaper.

Last year the new government of President Dilma Rousseff declared that a central plank of its monetary policy was to reduce interest rates as steadily and regularly as possible. One obvious aim was to control the growth of the nation’s economy and inflation.

This Brazilian news reflects the most recent decision taken by the Monetary Policy Committee which controls interest rates in the country. In a bulletin issued following the announcement, members stated that the reduction was designed to help achieve this year’s overall inflation target of four point five percent.
An important part of the Central Bank’s strategy is to try to gauge the effects of the global slowdown on Brazil and as far as possible neutralise the negative aspects. Many countries are of course trying to do this. However, as Brazil has now become the earth’s sixth largest economy, she is in a better position than many others to influence events rather than just respond to them.

Many commentators are predicting that this latest cut in the Selic rate will not be the last. It’s expected that on the months to come there will be at least a couple more, each of them at the half a percent level.