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Weekly Report - 19 March 2009 (ISSN 1741-7422)

BRAZIL: Slowing economy prompts interest-rate cut

The central bank monetary committee (Copom) cut the base interest-rate, the Selic, this week by 1.5 basis points (bps) to 11.25% annually. This was the single largest Selic cut since November 2003, which brought the Selic to the level it stood at in April last year. Still, the cut was considered “conservative" by many analysts, not least because it was prompted by a drastic fall in economic activity in the last quarter of 2008. Official figures showed the economy shrank by 3.6% quarter-on-quarter, more than the consensus forecast of a 2.5% fall. For many, the economic deceleration in the last quarter of 2008 signals Brazil will enter a recession.

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