Weekly Report - 18 June 2009 (WR-09-24)

BRAZIL | Interest-rate falls to record low. The central bank cut the base interest-rate, the Selic, to a record low of 9.25% annually last week. The bold cut of one percentage point surprised analysts, who now expect the Selic to fall to around 8.5% by the end of the year. The cut made investment in bonds and in some private funds less attractive than savings accounts, but a move by the government to tax big savers was expected to keep them competitive. At the same time, the finance minister, Guido Manteiga, said that banks would have to become more competitive in their credit offers to attract customers because of the falling Selic. This, he said, would increase credit availability and boost economic growth.

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