Brazil´s Central Bank cuts basic rates by 0,25% instead of 0,5% expected before the US mortgage crisis
Brazil´s Central Bank just announced a reduction of 0,25% in the basic interest rate, as expected by everyone sice last week.
Before the US mortgage market crisis started last month, there was a perception that Central Bank´s Monetary Policy Committe (Copom) would cut basic rates by half a point, keeping the trend to reduce interest rates in order to estimulate economic growth (and get the so-called investment grade).
Besides the external crisis centered on the US mortage market, Compom looke also to internal aspects of the recent figures - they found out GNP is running at 6% a year at this moment, although the expectation for this year was around 5%.
There are price pressures in the internal front, comming specially from food, as well as the whole uncertainity outside.
Tonight decision shows, as former Finance Minister Antonio Palocci just told us, that there´s a perception of the external turbulence and its risks but up to now the perspetives for Brazilian economy are as good as the economic fundamentals.
Market observers say taht could be the last cut in Brazil´s basic rates, which annual percent in present 11,25%.
Dolar went up by the end of business day, but not that much, closign at US$ 1,00 = R$ 1,97.
Sao Paulo stock exchange closed follwing the downward trend observed in New York and closed with a loss of 1,5% after five consecutive days above the line.
