Interest rates go up for the 16th month

The interest rates for credit operations increased again in January 2016. They have risen for the 16th consecutive month, according to the National Association of Executives in Finance, Administration, and Accounting (ANEFAC).

According to ANEFAC, interest rate rose in all six lines of credit surveyed (trade interest, revolving credit cards, overdraft; CDC-bank-financing vehicles, personal-loan banks, and personal-financial loan). For this reason, the average interest rate for individuals increased 0.11 percentage point from December to January this year and reached 7.67% per month (142.74% per year). This is the highest interest rate since February 2005.

Among the companies, there was also an increase in three lines of credit surveyed (capital working, discounted trade bills and guaranteed account). The average interest rate for companies rose 0.06 percentage point, increasing from 4.27% per month (65.16% per year) in December 2015 to 4.33% per month (66.31% per year) in January 2016; the highest interest rate since February 2009.

For Miguel José Ribeiro de Oliveira, ANEFAC director of economic studies and research, the rise in interest rates can be explained by the economic environment which increases the risk to also have delinquency rates up. "This moment is based on higher inflation rates, higher taxes, and higher interest rates, and all these reduce household income. In addition to the low economic growth, unemployment rates should also grow," said Oliveira.

The ANEFAC director added that forecasts for 2016 are also negative for all these factors. "Financial institutions increase their interest rates to minimize possible losses on increased delinquency [rates]. Another factor that explains the high rates is the rise in interest rates predictions, due to the political and economic turmoil.

Translated by Amarílis Anchieta