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Economy & Business - July 2005

BRAZIL: Steering straight

Although businessmen and the trade unions say that the economy craves lower interest rates, the central bank's monetary policy committee (Copom) unanimously decided to maintain the basic interest rate (Selic) at 19.75% annually at its latest meeting on 20 July. This is the second consecutive month the Copom has held the Selic at the 19.75% level. The odds are shortening on a cut in rates in August. A more lengthy delay could stifle what little growth there is left in the economy. Even with the strong performance from exports, the economy only grew by 0.3%, quarter-on-quarter, in the first three months of 2005.

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