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Brazil slashes lending rate to 11.25 percent

Brazil slashes lending rate to 11.25 percent

Brazil's central bank slashed its benchmark interest rate by 1.5 points to 11.25 percent on Wednesday in an effort to keep recession at bay after Latin America's largest economy registered its sharpest decline in years.
It is the biggest single rate cut since November 2003, when the Selic was lowered from 19 percent to 17.5 percent.
It nevertheless disappointed some industry leaders, who said more aggressive steps are necessary if Brazil is to avoid recession this year as the world economic slowdown lowers demand for its key exports.
The bank announced the cut a day after the government reported that gross domestic product contracted 3.6 percent in the fourth quarter of 2008 compared with the previous three-month period _ marking the biggest quarterly decline since Brazil started compiling the information in 1996.
Brazil's economy expanded 1.3 percent in the fourth quarter compared to the same period a year ago, but that was lower than the 6.8 percent increase during the third quarter.
Overall, Brazil's economy expanded 5.1 percent in 2008, but most of the gains came during first three quarters of the year as Brazil rode an unprecedented economic boom. Economists and business associations are predicting that GDP will increase about 1.2 percent this year.
The president of one of the nation's top big business lobbies, the National Confederation of Industry, said Wednesday's Selic cut fell short of his expectations of a "bolder reduction to revive the economy."
"The risk the country is facing is not inflation, but recession," Armando Monteiro told reporters.
Paulo Skaf, president of the Sao Paulo Federation of Industries, told Globo TV the Selic "must drop to eight percent as quickly as possible in order to guarantee some economic growth in 2009."
Brazil's Ibovespa index of leading stocks closed essentially flat Wednesday, edging up 0.03 percent to close at 38,805 before the rate cut was announced.


Updated : 2021-03-07 20:42 GMT+08:00