BC reduces Selic rate to 11.25% per year
This article was translated by an automatic translation system, and was therefore not reviewed by people.
The Copom (Monetary Policy Committee) has shown to be sensitive to the worsening of the global financial crisis and announced yesterday in the afternoon, cutting basic interest in Brazil by 1.5 percentage point, reducing the Selic rate from 12.75% to year to 11.25% year year.
It was the second cut of the interest from the worsening economic crisis occurred from September. In January, the Copom cut the Selic to 13.75% to 12.75%. Now the directors of BC only to meet again on 28 and 29 April. The vote was unanimous, without bias.
The cut in interest rates is the biggest since November 2003 when the rate fell from 19% to 17.50% a year. With this further reduction, the Selic back at where it was in March 2008, the lowest in history.
The memo distributed to the end of the meeting, the Copom informs: "Evaluating the macroeconomic scenario, the Copom decided today to reduce the Selic rate to 11.25% a year without bias, unanimously. The Committee will monitor the evolution of the outlook for inflation trajectory until its next meeting, taking into account the magnitude and speed of adjustment of the basic interest rate has already implemented and their cumulative effects, and then define the next steps in its monetary policy strategy .
Despite the cut yesterday, the country continues with a major interest rates in the world. In nominal terms, are ahead of the Selic interest rate in Venezuela (17.06%), Russia (13%), Turkey (11.50%) and Argentina (11.38%). For real interest rates (discounted for inflation), Brazil remains at the rate of 6.51% per year.
BC's decision was influenced, mainly by data on the slowing economy and the fall in inflation recorded in recent months.
The fall in GDP has led the Minister Guido Mantega (Finance) to abandon the goal to grow 4% this year. Two days ago, President Luiz Inácio Lula da Silva of BC also collected a faster decrease of interest to reactivate the economy.
At the last search Focus, published on Monday, the market anticipated the cut Selic to 11.75% a year at this meeting and to 10.25% by the end of 2009. The research, however, was conducted before the financial market took note of the Gross Domestic Product (GDP) for the fourth quarter of 2008, released before the IBGE. GDP shrinking 3.6% in the third quarter, the biggest drop of the series, begun in 1996.
Businessmen, economists and union leaders defended a cut in the Selic stronger, up to two percentage points as a measure to combat the effects of the worsening international crisis in the Brazilian economy.
Who decides the interest
The Copom was established in June 1996 to establish the guidelines for monetary policy and set interest rates. The College is composed of the Central Bank President Henrique Meirelles, and the directors of Monetary Policy, Economic Policy, Special Report, International Affairs, Rules and Organization of the Financial System, Surveillance, and Desestatização settlement and administration.
Decision, although expected, shares the views
The chairman of the Federation of Industries of the State of Paraná (Fiep), Rodrigo Rocha Loures, said yesterday that the decision of the Copom to reduce the interest rate to 11.25% pa is a true mea culpa of the Central Bank.
"Although late, the plug fell in the Central Bank," said the entrepreneur, emphasizing that there is still room to reduce the Selic. "We have a target interest rate of one digit."
For Rocha Loures, reducing the base rate could have been started in the late last year to avoid the effects of international crisis on the Brazilian economy.
"Now that the Central Bank seems to have awakened from their sleep, we expect a firm decision to revise the monetary policy which has become a real structural problem for Brazil," he emphasized.
The president of Fiep the agenda of Copom should also be reviewed. "At this moment of crisis, there is no more waiting 45 days to make decisions that have impact on the productive activity," found. "We must reduce the space and make it happen meetings of Copom.
The National Confederation of Industry (CNI) in turn, was still dissatisfied with the cut promoted by Copom. Second note circulated yesterday, "the decision of Copom to increase only marginally decrease the rate of interest for a point and a half percentage, frustrates the company, the Brazilian industry and productive agents."
The organization's president, Armando Monteiro Neto, "this movement to accelerate the cutting of interest, even in the right direction, does not have the intensity needed."
Still according to the CNI, with the decision "contained" yesterday, the central bank moves and shows little disparity with the effort to avoid recession and its harmful consequences to the country, businesses and employment.
"We believe it is urgent to adopt a more aggressive posture, reduction of interest consistent with the requirements of the moment," said Monteiro Neto. "We need to bring the Selic for the level of one digit," he concluded.
The Central Única dos Trabalhadores (CUT) believes that the Monetary Policy Committee (Copom) should have opted for a larger cut than the announcement of 1.5 percentage point.
"Brazil still has a chance to record growth in 2009 and must be bold to not lose the opportunity," said the chairman of the central, Artur Henrique.
Interest
Some banks took yesterday to announce cut in its interest rates, following the movement of the Copom. Unibanco, for example, will reduce reported that as of Monday, the maximum rate charged on the Personal Loan plots (CPP) and check in particular to an individual. For companies, reduced the maximum rates will be charged in special and check the line of financing for working capital (Unigiro).
Banco do Brasil and Bradesco is also aligned to Copom and informed that as from tomorrow (Friday) there will be reduction in rates of virtually all credit lines, in varying percentages, both for legal and for individuals.
Source: Paraná Online and Agencies
This article was translated by an automatic translation system, and was therefore not reviewed by people.
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