Brazil Cuts Interest Rates 


By: Associated Press
The Washington Post, March 20, 2002


Sao Paulo, Brazil Encouraged by slowing inflation and hopes of economic recovery, the central bank on Wednesday cut its key interest rate by a quarter point, the second easing in as many months.

Following its two-day monthly meeting on rates, the bank's monetary policy committee announced it was cutting the overnight Selic rate to 18.50 percent from 18.75 percent.

It set no bias for rates in the future, meaning another cut could be forthcoming next month, should positive economic signs continue.

In a statement, the bank said chances of a U.S.-led global economic recovery was cause for optimism.

The rate cut was less than many had predicted. Many economists had predicted a 50 basis point cut, but some said central bankers were probably more cautious because of a recent increase in oil prices.

Still, Brazil's key inflation index rose just O.36 percent in February, down from 0.47 percent in January, fueling optimism that the government can bring inflation to below an established target ceiling of 5.5 percent.

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