Brazil to Cut Interest Rate

Brazil plans to cut the TJLP long term interest rate to 6% from 6.25% at its meeting on June 30, according to Finance Minister Guido Mantega. The move is set to be ratified by the National Monetary Council, or CMN, and is intended to stimulate investment among Brazilian companies. The council reviews the TJLP every three months.

The minister made his remarks during a speech in the capital city of Brasilia. “We are giving a boost to a sector that suffered badly in the crisis, which is the capital goods sector," he said in his speech. Additionally, he indicated that the government would increase subsidies on financing for the acquisition of capital goods and export credit.

The TJLP is used for loans to businesses made by the Brazilian National Development Bank, which is backed by the government. The TJLP is typically much lower than the benchmark Selic base rate, which is currently at 9.25%.

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30/06/2009

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