Brazil cuts interest rates to 10.5%

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Brazil‘s central bank has announced cuts to interest rates, the fourth consecutive reduction since the start of the country’s economic downturn.

Interest rates have now been slashed to 10.5% as the government hopes to tackle the slow moving economy, which stalled in the second half of last year.

Last August, the central bank abruptly ended a tight cycle of fiscal and monetary measures after the Brazilian economy began its descent.

Gross domestic product in the third quarter suffered a 0.04% decrease compared to the previous quarter. However, economists still expect a 3% growth rate for the full year.

Economists believe the government wants to use the country’s sluggish economic conditions as a rationale to continue the reduction in interest rates. Brazil currently has the worlds highest interest rates for a large economy.

Interest rates have been cut from their peak of 12.5% and this move is already yielding results, but more may still need to be done to stabilise the country’s economy.

The central bank stated: “The monetary policy committee understands that to mitigate in a timely way the effects coming from a more restrictive global environment, a moderate adjustment in interest rates is consistent with the convergence of inflation to the target in 2012.”

Transfer money to Brazil

If you are looking to invest in Brazil, think carefully about how you will be transferring money to the country. Foreign currency exchange rates quoted by banks are usually worse than the exchange rates available through specialist currency dealers, which means they are probably not the best way to send money abroad.

So if you are planning to send money to Brazil, be sure to compare the market before you buy your overseas currency.

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