Clipping of news on Brazilian Culture, Law and Citizenship
30/05/2012
This article was translated by an automatic translation system, and was therefore not reviewed by people.
Market bets cut of 0.5 points as a government strategy to stimulate economy
The Monetary Policy Committee (Copom) Central Bank (BC) of Brazil should reduce this Wednesday for the seventh consecutive time its benchmark interest rate (Selic) from the current 9% to a record low of 8.5% per year with the goal of boosting the meager economic growth in a context of international crisis, analysts said.
The government of President Rousseff recently reduced its estimate of growth from 4.5% to 4% in 2012, according to a paper presented before the Senate by the Minister of Finance, Guido Mantega, one day after launching a new series of measures to boost economy.
"We are predicting a cut of 0.5 percentage point tomorrow," he told AFP Marcelo Solomon, an economist for Latin America investment bank Barclays.
"They are concerned about growth. They are taking a series of measures that show that things are not going well," said Eduardo Velho, chief economist at brokerage Prosper, which provides for a reduction of half a percentage point, although not rule out "a surprise" after the committee meeting.
"If there is a cut of 0.75 percentage point, not a unanimous decision," said Old AFP, despite claiming that by the end of this year the base rate may be below 8% per year.
The Monetary Policy Committee (Copom) will begin meeting on Tuesday afternoon. It will be completed on Wednesday after the markets close.
Since last August, the agency cut of 12.5% per year to 9% per annum the reference rate in a country that has remained very high interest rates to combat hyperinflation of the 1980s and 1990s, but is now concerned with boost growth.
The bank Goldman Sachs said it was likely a reduction of 0.5 points on the reference rate "rather than an aggressive 0.75" point, after being released inflation data "out of convenience" and after the recent fall of real against one U.S. dollar in international markets greatly strengthened.
Inflation surged to 6.5% in 2011, and the Central Bank expects that this year is in the center of the official target of 4.5% in April despite having reached a high of 5.1% in 12 months. In the first four months of 2012, inflation is 1.87%.
The crisis in Europe and the prospect of a slowdown in China, the major buyer of Brazilian raw materials, creates doubts about the performance of the sixth largest economy in the world this year, after expanding by only 2.7% in 2011 after a vigorous 7.5% the previous year.
Source: Ig News
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This article was translated by an automatic translation system, and was therefore not reviewed by people.