Guido Mantega, the Finance minister of Brazil, told reporters this Tuesday, September 2, that the Brazilian government has no intention of lowering interest rates as long as inflation threatens to come in higher than the established target.

The Brazilian minister added that the country's benchmark lending rate, the Selic, will continue to rise until the government is assured that its original 4.5% inflation target will be met.

"Until this happens I do not think interest rates will be reduced," Mantega said in a radio interview. The benchmark rate is now 13%.

Mantega also said the Brazilian economy was decelerating following several measures to reduce available consumer credit which was having an impact on inflation.

"We've taken several measures to reduce the growth of domestic demand and the signals are that the economy is decelerating," said Mantega. He added that credit which was growing at an annualized 30%, "now is in the range of 15/20%, which is more sustainable in time."

A slower credit growth is expected to curb the demand for cars, electric appliances and new housing, helping to contain inflation.

Mantega said that inflation by the end of the year should be in the government's original target of 4.5% with a plus/minus tolerance of two percentage points which makes it 6.5%. "Our policy is long term stable, sustained growth".

Although August consumer prices index has not yet been made public by Brazil's statistics agency, in July inflation was running at an annual 6.4% with food prices continuing to push up costs across South America's largest and fast growing economy

Mercopress

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Inflation
written by Bill, September 03, 2008

Many countries are now faced with higher inflation. By not lowering interest rates the finance minister may be hurting short-term business, however I believe that he is also saving long term business as well as he keeps the interest rates high so as to prevent inflation. I think the biggest challenge for Brazil now will be to help the economy expand while fighting off inflationary worries.

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Bill
written by João da Silva, September 03, 2008

Excuse me Bill. Do you live in Brazil or elsewhere?

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Encourage Saving...
written by dnbaiacu, September 03, 2008

Don't lower interest rates. Learn from the U.S . IF and WHILE there is time!

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dnbaiacu
written by João da Silva, September 03, 2008

Encourage Saving..

You have too much influence from your Mom and Dad. Is anyone going to listen to this sane advice of yours?

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Don't Expect Lower Interest Rates, Warns Brazil's Finance Minister
written by ch.c., September 03, 2008

He wants Youuuuuuu to pay 40 % on cars leasing instead of 33 % now
He wants Youuuuuuu to pay 65 % on consumers goods installements payments instead of 55 % now
He wants Youuuuuuu to pay 200 % on overdrafts instead of 163 % now

Lets face it even when Youuuuu had not so long ago the inflation rate at around 4-5 % your rates were not much lower than your actual rates stated above.

Just think about it : this is the modern way to enslave people ! Nooooo different at all !


But the majority of Brazilians being the world most Masochists applaude and beg for more.

And to Bill : your comments are laughable. Re-read facts stated above ! Is your name Bill Lula ?


Viva Brazil !

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...
written by João da Silva, September 03, 2008

By not lowering interest rates the finance minister may be hurting short-term business, however I believe that he is also saving long term business as well as he keeps the interest rates high so as to prevent inflation.

No. Change "may" to "is" and rewrite the sentence as "the finance minister has already killed short term (what exactly is this "short term" business?) and is killing the small and medium size businesses.

However, you are right about "long term" businesses. One example that comes to my mind is Lotus farming. We can have a 25 year plan to feed the population with Lotus flowers that are very nutritious.Probably BNDES can subsidize this project for LARGE farmers.

I think the biggest challenge for Brazil now will be to help the economy expand while fighting off inflationary worries.

Thank God, we have brainy people at the helm of our economy, who can expand it at full steam without worrying about inflation. No big deal. They know what they are doing.

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Reality
written by dnbaiacu, September 03, 2008

Just think about it : this is the modern way to enslave people ! Nooooo different at all !

TRUE TRUE TRUE
And deliberately being done

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dnbaiacu
written by João da Silva, September 03, 2008

TRUE TRUE TRUE
And deliberately being done

Que bom. We always knew you were super smart. Pride of BA.

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