Brazil and USA Cut Interest Rates

Reduction of half of a point is the first in decrease in 16 months; in USA, the Fed cuts rate for first time in 11 years

Eduardo Cucolo Júlia Moura
São Paulo

Faced with low growth, below-target inflation, and falling interest rates in other developed and emerging countries, Brazil and the US followed a worldwide trend and cut their interest rates on Wednesday (31).

The Central Bank lowered the interest rate from 6.5% to 6% per year, the first reduction in the last 16 months and the lowest level since the rate became a monetary policy instrument in 1999.

Brazilian Central Bank. ( Foto Charles Sholl/Brazil Photo Press/Folhapress) - CHARLES SHOLL

US interest rates, in turn, were reduced by 0.25% to between 2% and 2.5% per year. The Fed last lowered interest rates in 2008, when the country was in a severe financial crisis.

The Monetary Policy Committee signaled further cuts to the Brazilian rate. Analysts forecast interest rates close to 5.5% per year at the end of 2019, given the inflationary picture. The 12-month IPCA stands at 3.37%, to a target of 4.25%.

Also on Wednesday, Caixa, Itaú, and BB cut their rates for individuals and companies.

Translated by Kiratiana Freelon

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