Brazil's central bank cautious over fresh interest cut

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IANS | 21 Jul, 2012
Brazil's central bank has said it would remain cautious about "any additional steps toward monetary flexibility" despite extensive market expectations of a fresh rate cut.

A report of the latest meeting of the Monetary Policy Committee of Brazil released Thursday said that the domestic economy is recovering much slower than expected, despite a string of government's stimulative measures, reported Xinhua.

The wording was interpreted by the financial markets as a hint of more cuts in the interest rate.

The Brazilian government has been struggling to revive the country's flagging economy, rolling out a series of favourable policies, including lower taxes, cheaper credit and rate cuts.

On July 11, the central bank cut its benchmark interest rate by half a percentage point to a record low of 8 percent in the eighth consecutive rate cut this year.

The measures, however, have failed to impress the market, with economic activities remaining at a low level.

Analysts believed that the credit-financed consumption among Brazil's households has led to the impotence of the simulative measures.