Wellton Máximo       Reporter Agência Brasil

Brasília – Following the announcement of the reduction of the Selic by 0.5 percentage points, the National Industrial Confederation (“CNI”) said there should be further reductions. In a note, the CNI declared that the Brazil’s basic interest rate, now at 10.5% per year, remains above international standards, which means there is room for more cuts.

According to the CNI, international economic turbulence continues to create uncertainty and credit on global markets remains tight so it is a good time to move ahead with more reductions of the domestic interest rate.

“CNI believes it is necessary to carry on with the interest rate reduction cycle so as to mitigate the effects of the downturn in worldwide economy activity and head off exchange rate valuation tendencies,” said the note.

The note went on to lay out suggestions for government policy that would facilitate further reductions in the Selic. “CNI is in favor of rigid execution of the 2012 budget. Cuts in spending should be concentrated in government upkeep (“custeio – manutenção da máquina pública”), not in infrastructure and other spending essential for growth,” concluded the note. 

Link - Para CNI, crise externa e corte de gastos abrem espaço para novas reduções da taxa Selic