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Strategies & Market Trends : Telebras (TBH) & Brazil

TBH 0.511

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3:50 PM EST

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To: djane who wrote (7284)	8/30/1998 8:54:00 PM
From: djane	Read Replies (2) of 22640

Loyola: Crisis seen not affecting interest rate reduction Aug/28/98 at 04h21 pm ET Sao Paulo, 28 - Former president of the Central Bank (BC) and currently an analyst at the Tendˆncias consultancy, Gustavo Loyola, said today that the BC has even intensified the rate at which short-term interest rates have been reduced. During a teleconference conducted by the consultancy company this Friday, Loyola said the bank's decision to reduce the tax rate on fixed-yield funds capital gains to zero see related story, constitutes one more indication that the BC intends to continue with the gradual reduction of interest rates. However, Loyola believes the tax exemption will be temporary as it may favor arbitrage, as the domestic investor still has to pay a 20% tax rate on this type of investment. He affirmed that the bank is committed to defending its interest rate policy and added that the Tendˆncias consultancy forecasts the Basic Interest Rate (TBC) should be reduced to a figure between 18.50% and 19%, against the current 19.75% in the next Copom meeting on September 2. (By Josu‚ Leonel) Copyright c 1996 Agˆncia Estado. All Rights Reserved.

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